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Gland Pharma Ltd. entered into a put agreement to acquire Cenexi Group, thereby enhancing its contract development and manufacturing offerings in the Europe market.
The acquisition would also provide the company with the technical know-how in sterile forms, including ophthalmic gel, needleless injectors, and hormones.
The enterprise value/sales is about ~1.2 times CY21/CY22E. The EV/Ebitda is about 10 times CY21 and eight times CY22E. This is in line with generics business valuation.
While we raise our earnings per share estimate by 3% for FY24 to factor in additional business due to acquisition, we note that the acquisition is margin dilutive.
Also, the return ratios of Cenexi (post acquisition) for CY22E would be much lower than Gland Pharma’s.
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