Aspen Pharmacare shares crashed as much as 26% in the biggest slump since June 1998 after the South African drugmaker sold its infant-formula business for $860 million, less than some traders expected. The company also reported full-year earnings that missed estimates.
Read more about the Aspen-Lactalis deal here.
Here’s what traders are saying about Thursday’s share move:
“Management seem to think that the market got over-excited about the multiple they were going to get for infant milk,” Investec says in “quick thoughts” note after conference call.
Management declined to give forecasts for constant-currency profit increase over the next year, saying analysts should have factored in the negative impact from the South African rand.
Bridge Fund Managers
Market expected bigger sale price for infant milk formula business, money manager Nick Kunze said by phone. “We expected anything from $1 billion to $1.5 billion and even $2 billion, and they sold to the French and not the Chinese”
“It’s tougher and more competitive out there, the production problems that are evident in the numbers were a bit of a disappointment,” said Vestact CEO Paul Theron. “Some currency headwinds, a bit of a disappointment.
Maybe the price they got for the sale of the infant nutritional business was a little bit less than some people assumed”. “Investors should be patient — for a company with nearly R50 billion worth of debt, receiving R13 billion is quite a nice chunk of change that gives them headroom to play around with the numbers”.
© 2018 Bloomberg L.P