Ascendis shareholder activist group happy with job-saving sale of animal health division

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Ascendis Health's business includes health supplements
Ascendis Health's business includes health supplements
  • Thirteen-year-old Ascendis produces brands such as Vitaforce supplements, Nimue skin products and Solal supplements.
  • But the company needs an urgent solution for the R6.6 billion debt hole it had dug itself into, in order to avoid business rescue.
  • This week the group said that Acorn Agri & Food had made an offer for its animal health division.

Small shareholders in Ascendis Health that have grouped together as Ascendis Activist Investors (AAI) have backed the health and wellness company’s proposed R770 million sale of its animal health business, saying it's a necessary move. But the company needs to speed up its restructuring process, they say. 

The 13-year-old Ascendis produces brands such as Vitaforce and Solal supplements, as well as Nimue skin products. But now the floundering JSE-listed company needs an urgent solution for its debt of R6.6 billion to avoid going into business rescue.

In its bid to reduce the debt and get its business back in shape, Ascendis has begun disposing of its assets, including its Respiratory Care Africa business for R450 million, followed by the sale of its biosciences division for R85 million.

Last month Ascendis announced the sale of its 49% stake in Farmalider, a pharmaceutical company based in Spain, for R84 million. 

And this week the group said that Acorn Agri & Food has made an offer for its animal health division - which develops, imports and manufactures medication for farm animals like pigs and sheep, as well as pets like dogs, cats and horses, and wildlife. Ascendis has valued the business at just over R770 million and anticipates that the deal will be concluded in the fourth quarter of the year.

One of the conditions for the deal’s approval is that Acorn retains all the division’s employees and management.

AAI spokesperson Harry Smit said the group was happy that the division’s jobs would be protected, but that the value of the business was considered slightly low.

"It’s about R80 million less than we anticipated, but it’s still a good deal," he said.

Smit added that shareholders were unhappy that Ascendis had found itself in this position and had to sell the animal health business, but they understood the need to pay off its debt. Although he wouldn’t provide further details, Smit said there were a few overseas companies making a play for Ascendis.

With regards to the debt-reduction programme, he said AAI was not satisfied with the slow pace. He added that the delay means that Ascendis will be paying more interest as part of as part of its agreement with lenders. This means that Ascendis has had to add an additional R298 million to its finance costs, bringing them up to R545 million, according to its results for the six months ended 31 December 2020.

Smit added that another concern was the hefty fees the company would have to pay its attorneys and advisors as the restructuring drags on.

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