Ascendis Health [JSE:ASC] has concluded a sale agreement of its pharmaceutical manufacturing facility in Isando, Gauteng, to international pharmaceutical company Mylan for R130m.
The contemplated sale forms part of Ascendis Health's non-core asset disposal programme announced earlier this year following management's strategic business review.
CEO Thomas Thomsen said after an extensive evaluation of its pharmaceutical manufacturing requirements Ascendis decided to sell the Isando plant owing to its low utilisation and to reduce the complexity of SA pharmaceutical operations.
The 28 000m² plant was acquired through Ascendis Health's purchase of Akacia Healthcare in 2015.
Following the sale of the Isando plant Ascendis Health will be consolidating its pharmaceutical manufacturing into its facility in Wynberg, Gauteng.
Thomsen said the cash proceeds from the sale will be applied mainly to reduce gearing levels and to fund the working capital requirements of the business. Part of the proceeds will be invested in upgrading the company's supply chain, he said.
Mylan is a supplier of ARV and other oral solids to the SA Department of Health (DoH). Mylan plans to manufacture ARV medicines and other oral tablets in the facility to supply the DoH.
Ascendis Health has concluded a manufacturing and supply agreement with Mylan to continue producing the products currently being manufactured at the Isando factory.
The transaction is subject to approval by the Competition Commission.
Ascendis Health previously announced the sale of its SA sports nutrition business for R54m and its direct selling and network marketing business for R40m.
The group's bioscience business, comprising Avima/Klub 5, Efekto, Marltons and Afrikelp, has also been identified for disposal as it is considered non-core to the group's new strategy which will focus primarily on the pharma and consumer healthcare sectors.
By late afternoon on Thursday Ascendis shares were trading up 2% at R3.57 per share.