22 September 1999
EXPANSION INTO THE U.K. OVER THE COUNTER PHARMACEUTICAL MARKET
McBride plc ('McBride'), the leading European supplier of retailer brand
household and personal care products announced today an offer to purchase the
80% of the equity of Wrafton Laboratories Limited ('Wrafton'). Wrafton is the
leading independent European over-the-counter ('OTC') pharmaceutical contract
manufacturer, supplying multi-national branded goods companies and is a fast
growing major supplier of retailer brand OTC pharmaceuticals to UK retailers.
The offer which values the whole of the equity at £21.6 million is structured
to provide McBride with 80% of the equity share capital with the three founder
directors retaining 20%. McBride has received irrevocable undertakings to
accept the offer from Wrafton shareholders owning in excess of 90% of the
equity share capital to be acquired (excluding the 20% being retained by the
founder directors). McBride will be in a position to acquire any outstanding
The consideration comprises an initial payment of £17.3 million for 80% the
share capital of Wrafton payable in cash on completion. An additional payment
for the remaining 20% of the shares will be made at a future date and based on
the profit performance of the company. The three full time directors Mr Brian
Sherwin, Mr Mike Forfitt, and Mr Doug Birghall, will remain with the business
and have signed new employment contracts and will own the 20% of the equity
not being acquired.
A strategic review by McBride of the opportunities for expansion of its
product range identified OTC medicines as an important and growing market
sector. The purchase of Wrafton is McBride's first strategic move outside its
existing household and personal care sectors and will provide a base from
which to build its business in the OTC medicines market. The acquisition of
Wrafton will increase the Group's sales in UK by 10% and provides a platform
for future growth in this dynamic sector.
The UK OTC market was estimated to be worth around £1.6 billion at RSP in 1998
and grew by 6.9% versus 1997. The UK is one of Europe's largest OTC markets
and the combination of higher NHS prescription charges, the increased
propensity of consumers to self-medicate and the growing awareness of the
efficacy, safety and value of OTC pharmaceuticals will ensure continued
growth. Wrafton operates in the three main sectors of the OTC market, namely
oral analgesics, gastro-intestinal, and cold/flu remedies, all of which are
experiencing solid growth. In addition, UK supermarkets have strategically
grown their share of traditional chemist products as a source of growth. Part
of their product offer is the development of retailer brand alternatives.
Over the last two years UK grocers have raised their share of the OTC market
from 28% to 34% and within these sales retailer brand has increased from 18%
The most recent audited accounts for Wrafton are for the year ended 30 April
1999. These accounts showed a profit before taxation of £1.75 million on
turnover of £25.8 million. The net assets of Wrafton at 30 April 1999 were
£3.3 million. The estimated net debt at acquisition is £2.5 million.
Commenting on the acquisition, McBride's Chief Executive, Mike Handley, said:
'The purchase of Wrafton is an exciting opportunity for McBride and makes us
the leading European independent supplier of contract and retail brand OTC
pharmaceutical products. Wrafton's technical and manufacturing expertise will
enable McBride to benefit from the expansion of this growth sector.
We expect that Wrafton will be earnings enhancing in its first full year as
part of McBride.'
Mike Handley, Chief Executive 01494 607050
Terry Monks, Group Finance Director 01494 607050
Andrew Dowler 0171 831 3113