Permira buys German specialty pharma group Neuraxpharm

FRANKFURT: Buyout group Permira has agreed to buy German pharma group Neuraxpharm as it seeks to benefit from an expected surge in demand for the company's antidepressants, painkillers and other products for the central nervous system.

The deal values the company at roughly 1.6 billion euros ($1.88 billion), including debt, or at about 13 times its expected 2021 core earnings, people close to the matter said.

Permira and the seller, private equity firm Apax, declined to comment on the financial details of the deal.

Apax bought Neuraxpharm in 2016, combined it with Invent Farma and later it strengthened the company through add-on acquisitions such as FB Health and Farmax.

The company makes specialty pharmaceuticals for neurological and psychiatric disorders including epilepsy, Parkinson's disease, Alzheimer's disease, depression and psychosis. It has annual revenues of more than 460 million euros and 850 employees.

While global M&A activity tumbled to its lowest level in more than a decade in the second quarter, healthcare is one of the few sectors that is expected to see only a relatively small impact on dealmaking from the pandemic in 2020, as its products and services are considered resilient to the crisis, investment bankers say.

Jefferies, Linklaters and PwC advised Apax on the deal, which Reuters flagged in July.

Apax Global Alpha, which is an investor in the Apax VIII fund selling Neuraxpharm, said the deal is expected to result in a gross multiple on invested capital of 3.5 times and a gross internal rate of return of 36%.