US investment company Blackstone is working with financial advisers on a potential sale of Japanese-based Alinamin Pharmaceutical, which could be valued at around ¥300bn (US$1.9bn), reports Bloomberg, citing sources. Other options include an initial public offering.
Takeda sold Takeda Consumer Healthcare to Oscar A-Co, a company controlled by funds managed by Blackstone, in April 2021 for ¥242.0bn (US$1.6bn). The business, which fields a variety of OTC medicines and health products, such as Japan's first vitamin B1 preparation Alinamin and Benza cold remedy, was subsequently renamed Alinamin Pharmaceutical.

Nicholas Hall Writes: I've described 2024 as The Year of M&A, when up to 10 medium-sized and large CHC assets will be brought to market. Here at NHC our M&A boutique is already involved in several of these deals. Three years ago we were brought in to advise a potential buyer of the Takeda Japanese OTC business in the final weeks of the negotiations. My impression was that in preparing it for sale, profitability had been boosted by a cut-back in marketing spend and, even worse, by almost no new product development. Yet NPD was vital as the rights to Takeda's market-leading probiotic, Biofermin, had just been acquired by Taisho. Five years before the sale, Takeda had been the fastest-growing OTC player with scale in Japan. By the time of the disposal, the company could show little growth compared with its peers, a situation I described as "From Hero to Zero in 5 Years", which landed me in enormous trouble with my client. But finally they got the message that this might not be an easy business to turn around, which was reflected in their offer, and the business was duly acquired by Blackstone.
If Bloomberg is correct, and Blackstone is already contemplating selling Alinamin just three years after purchase, then it looks as though this might not have been such an inspired deal. Time will tell and perhaps Blackstone will make a profitable exit, but the point remains that too many businesses are "fattened up" for market with an artificially-high EBITDA. That leaves the buyer in a quandary: If money is spent to grow the top line, profitability tumbles. Defend the bottom line and the business will achieve little growth. Perhaps a strategic buyer could take its time to rectify the problem; but Private Equity, which is driving most CHC deals at present, is time-sensitive and often needs to sell an asset before it has reached its natural ceiling in order to close the acquiring fund.
We are pleased to announce that experts from Klick, Bayer and Little Big Brands will join the speaker panel during our forthcoming North American CHC Conference! Taking place on 12 September 2024 in Morristown, NJ in association with Biograph Inc, this meeting will consider How to survive & prosper in the search for CHC growth. Review the all-new agenda here! To secure your seat and save with the early registration discount, please contact elizabeth.bernos@NicholasHall.com.
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