A British-Russian consortium said they are close to an agreement for the purchase of 25% of Serbian majority state-owned drug maker Galenika, despite the government’s recent announcement that the talks over the sale have failed.
The consortium comprising UK-based Frontier Pharma Limited and Russia’s LLC NPA Petrovax Pharm aims to transform Galenika into a regional pharmaceutical leader and plans to invest up to 30 million euro ($31.8 million) in quality improvements, technological upgrades and new product development which will allow the company to deliver high-quality and affordable products, it told SeeNews in an e-mailed statement.
Banks are supportive of a deal with Frontier and Petrovax and they expressed their support to Serbia’s economy ministry on Monday, so there are no hurdles for the deal to be completed in the next two or three weeks, the consortium added.
“We are also very well positioned to support Galenika in becoming a leading exporter to several large developed and high-growth emerging markets, starting with our home markets of the United Kingdom, Russia/CIS, Turkey and Africa,” the tie-up pointed out.
Last week, the Serbian government said it plans to abandon the model for privatisation of Galenika through subscription of a capital hike by a strategic investor and find another model. The sale failed because the consortium had been unable to strike a deal on Galenika’s 70 million euro debt with five bank creditors, public broadcaster Radio Televizija Srbije (RTS) quoted trade union Nezavisnost representative Zoran Pantelic as saying. The consortium was ready to assume one-fifth of Galenika’s debt and cut in half the company’s 1,400-strong workforce, according to RTS.
The commission set up to select the bidder has declared the process unsuccessful and recommended the state to terminate it, but the decision has not yet been formally adopted by the government and the consortium has not yet been officially notified of any developments, Frontier and Petrovax said in the statement.
“Of all the options currently available to Galenika, a transaction with the consortium is by far the best alternative for the long-term sustainability and growth of Galenika. We look forward to continuing our productive discussions with the Republic of Serbia and being given the opportunity to transform Galenika into a world-class pharmaceutical company,” the consortium added.
The potential buyer has reportedly offered 7 million euro for the 25% shareholding interest. It was the only bidder left in the race after the bids submitted by India’s Cadila Pharmaceutical and Brazil’s EMS SA were rejected over procedural flaws.
The Serbian state controls 70% of Galenika directly and a further 15% via state-owned investment fund Akcionarski Fond Beograd. The remainder is controlled by retail shareholders.