Full Press Release Details
Procaps Group to Acquire Grupo Somar (including
Qu mica y Farmacia, Gelcaps and related entities) from Advent International, gaining an important presence in Mexico, the Region s
Second Largest Market
This acquisition reaffirms Procaps Groups'
strategy to become one of the fastest growing pharmaceutical organizations in Latin America
With FY2021 Net Revenues of $184 million, Grupo
Somar is one of the most relevant independent pharma companies in Mexico
MIAMI, USA - BARRANQUILLA, COL - May
17, 2022 - Procaps Group (NASDAQ: PROC) ("Procaps"), a leading integrated LatAm healthcare and pharmaceutical conglomerate,
today announced it has entered into a definitive agreement to acquire Grupo Somar (including Grupo Farmac utico Somar and Qu mica
y Farmacia and, Gelcaps and related entities) from Advent International ("Advent"), one of the world's largest
private equity investors.
Grupo Somar is an integrated pharmaceutical company
focused on developing, manufacturing, and marketing high-quality branded generic, private label and OTC products targeted to the private
market and offering CDMO services across key market segments in Mexico. Grupo Somar offers a diversified portfolio of products across
key categories and has strong R&D and manufacturing capabilities, operating six modern production facilities (two of which manufacture
Softgel capsules) in Mexico, including three FDA-approved plants with the ability to export to the U.S.
With a highly seasoned management team that
has driven strong operating and financial performance over the past years, Grupo Somar is well positioned to capitalize on the strong
secular tailwinds underpinning the Mexican market and sustain consistent growth across its different business lines. Grupo Somar generated
approximately US$184 million in net revenues (on an expected combined basis).
"We are thrilled to execute an important
milestone on our long-planned rollup strategy with an ideal acquisition target for Procaps," said Ruben Minski, CEO of Procaps.
"We believe Grupo Somar s diversified portfolio of innovative products alongside its management and technical capabilities
will help accelerate Procaps top and bottom-line growth into the near future in an accretive manner. With this acquisition, Procaps continues
to diversify its products and geographies based on being a leader in innovative oral delivery systems. I m excited to finally have
a physical presence in Mexico, a country for which we have had great admiration for many years. This is something that we have been working
towards for quite some time. This announcement marks an incredibly proud day in our company s 45-year-old history. Procaps went
public in September 2021 to make acquisitions just like this one."
Alejandro Weinstein, Chairman of the M&A Committee
of Procaps, added: "Grupo Somar represents a significant step forward for our regional consolidation strategy, expanding our
reach in Mexico, which we anticipate will represent approximately 30% of the total revenues of the companies' combined, with the
expectation to grow even more. We believe the combination of Grupo Somar and Procaps advances Procaps position as a leading pan-regional
integrated pharmaceutical company in Latin America and represents a unique opportunity to realize not only significant innovation capabilities
as well as significant synergies through cross-selling opportunities and cost efficiencies."
proud of the pharma platform we have built and are thrilled about the outcome, which was only possible with the dedication and collective
effort of Grupo Somar s strong management team" said Ariel Blumenkranc, Managing Director of Advent in Mexico. "We
believe Procaps is a very good harbor where Grupo Somar and its management team will continue to grow, developing new products both in
Mexico and LatAm." said Juan Pablo Zucchini, a Managing Partner at Advent International in S o Paulo.
The highlights of the acquisition include: (i) entry
into the second largest pharma market in LatAm, (ii) increased manufacturing (including of Softgel capsules) and R&D capabilities,
(iii) diversified portfolio, and (iv) combined synergies with a potential net present value between 25-40% of the total purchase price.
Procaps expects to fund the cash portion of the consideration
with a combination of cash from its balance sheet and incremental debt. In connection with the transaction, Procaps has secured a fully
committed bridge credit facility with Bank of America, JP Morgan and Morgan Stanley.
"We believe that by bringing Somar and Procaps
together, we are unlocking significant synergies across all areas of the combined companies. R&D expansion, cross-border roll-out
of our product portfolio, plants' specialization and efficiency, back-office centralization, and other synergies we expect will
enable us to deliver value for our stakeholders from the initial year of the transaction," said Patricio Vargas, CFO of Procaps.
"We expect that the cash generated by our combined companies will also allow us to rapidly deleverage our balance sheet, taking
our net debt to Adjusted EBITDA ratios to be near our financial policy target of 3x, within 12 to 18 months of closing the acquisition".
The transaction is expected to close in the fourth
quarter of 2022, subject to the satisfaction of customary closing conditions, including the approval of the Federal Economic Competition
Commission (COFECE) in Mexico.
Morgan Stanley & Co. LLC served as exclusive financial
advisor and Greenberg Traurig served as legal counsel to Procaps.
Conference Call Notice
Procaps will host a conference call and webcast to
discuss the transaction on May 18th, at 11 am ET. Procaps cordially invites all interested parties to participate in this call.
Date: May 18th, 2022
Telephone: Toll Free 1 844 204-8586 or International
Webcast: investors.procapsgroup.com
Replay: 1 877 344-7529 or 1 412 317-0088
Replay Access Code: 9224815
Procaps Group, S.A. ("Procaps") (NASDAQ:
PROC) is a leading developer of pharmaceutical and nutraceutical solutions, medicines, and hospital supplies that reach more than 50 countries
in all five continents. Procaps has a direct presence in 13 countries in the Americas and more than 4,900 employees working under a sustainable
model. Procaps develops, manufactures, and markets over-the-counter (OTC) pharmaceutical products and prescription pharmaceutical drugs
(Rx), nutritional supplements and high-potency clinical solutions.
For more information, visit www.procapsgroup.com or
Procaps' investor relations website investor.procapsgroup.com.
About Advent International
Founded in 1984, Advent International is one of the
largest and most experienced global private equity investors. The firm has invested in over 390 private equity investments across 41 countries,
and as of December 31, 2021, had 78 billion in assets under management. With 15 offices in 12 countries, Advent has an established
team of over 265 private equity investment professionals across North America, Europe, Latin America and Asia. The firm focuses on investments
in five core sectors, including business and financial services; health care; industrial; retail, consumer and leisure; and technology.
For over 35 years, Advent has been dedicated to international investing and remains committed to partnering with management teams to deliver
sustained revenue and earnings growth for its portfolio companies. Advent International has invested over $7.0 billion in 65 companies
across Latin America and has been present in Mexico since 1996 where it has been committed to the economic development of the country
and the region for over 25 years.
For more information, visit:
Website: www.adventinternational.com
investor.procapsgroup.com
Evelyn Espinosa / Paula Contreras
Tel: +52 1 55 3966 7087 / +52 1 55 3279 6324
Forward-Looking Statements
This press release contains "forward-looking
statements." Forward looking statements may be identified by the use of words such as "forecast," "intend,"
"seek," "target," "anticipate," "believe," "expect," "estimate,"
"plan," "outlook," and "project" and other similar expressions that predict or indicate future events
or trends or that are not statements of historical matters. Such forward-looking statements include expectations related to the timing
and completion of the acquisition of Grupo Somar and the consideration to be paid; expectation regarding the financing for the acquisition
of Grupo Somar; expectations regarding potential net present value of the purchase price for Grupo Somar; expectations relating to cash
generation and net debt to Adjusted EBITDA ratio financial policy target of 3x within 12 to 18 months after the acquisition; expectations
regarding Procaps' capital expansion and growth plans; expectation regarding Grupo Somar's continued growth; and expectations
related to synergies, increased manufacturing capabilities, the enhancement of Procaps' portfolio and Procaps' position as
a leading pan-regional integrated pharmaceutical company in Latin America as a result of the acquisition of Grupo Somar . Such forward-looking