Orion Corporation has signed an agreement on the sale of all shares in Orion Diagnostica Oy (i.e. the Orion Diagnostica business division) to an investment fund managed by Axcel Management A/S, a Nordic private equity investment company.
The fixed purchase price is approximately EUR 163 million. In addition, Orion has a possibility to receive as a variable component of EUR 60 million maximum. The payment of variable component is based on return on investment for Axcel at the time of their exit. Orion estimates to recognise a capital gain of about EUR 128 million in other operating income for 2018. Due to the uncertainty relating to the variable component, the estimated capital gain does not include any part of the variable component.
“Orion Diagnostica has operated as an independent business and it has no material business synergies with Orion’s other operations. The sale of the division will allow us to further focus on growth and achieving our financial goals. Orion is currently working on numerous projects that target growth in our core area of the Pharmaceuticals business. For example, we are actively evaluating late stage in-licensing opportunities. We also continue to invest in our own research and development activities, with new clinical trials, for example. The capital gain from the transaction will strengthen our equity position and maintain our ability to achieve our dividend distribution objective”, says Timo Lappalainen, President and CEO of Orion.
“Together with Orion Diagnostica’s management and employees, we intend to further develop the company into an even stronger operator in the global diagnostics market. On the back of an attractive customer proposition and a strong market position, we see great opportunity to grow Orion Diagnostica further both geographically and by expanding its product offering”, says Thomas Blomqvist, Partner at Axcel.
In the Orion Group Orion Diagnostica is a second business area, in addition to the Pharmaceuticals business area, and in the Financial Statements it is reported as its own segment. During the 2017 financial period, Orion Diagnostica’s net sales were EUR 54 million (about 5% of the Orion Group’s net sales) and its operating profit was EUR 8.9 million (about 3% of the Group’s operating profit). Its assets were EUR 52 million (about 5% of the Group’s assets). At the end of 2017 Orion Diagnostica had 282 employees (about 8% of the Orion Group’s employees).
Orion Diagnostica operates as an independent business, and it has no material business synergies with the Pharmaceuticals business.
As a result of the sale of Orion Diagnostica, Orion is updating its outlook for 2018 that was announced on 7 February 2018. Following the transaction Orion Diagnostica business will be reported as a discontinued operation. In the future, the Orion Group will have only one reporting segment, Pharmaceuticals business.
The closing of the transaction is expected to take place during the second quarter of 2018.
Photo of Timo Lappalainen: Orion Corporation