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Rabobank upbeat about Pharma Nostra acquisition.

(SeeNews) - Jul 11, 2011 - Rabobank is optimistic about the profit contribution of Pharma Nostra, a Brazilian raw materials supplier for pharmaceutical compounding, to Belgian health products wholesaler Arseus' (EBR:RCUS) earnings after its acquisition.

Nevertheless, the bank is concerned about the company's increasing debt, which is seen reaching about 2.6 times the earnings before interest, tax, depreciation and amortisation (EBITDA) result.

Arseus said today it would pay EUR 51 million (USD 72.3m) to buy Pharma Nostra, of which about 60% upon closing and the remainder over a period of three to five years.

According to Rabo, the deal size represents an enterprise value/EBITDA multiple of 7.6. This is attractive, given the potential synergies and the expected growth. The bank anticipates further a return on invested capital of 8.6% in the first year and a 7% contribution to earnings per share.

Rabobank has a "hold" stance and EUR 12.50 share price target for Arseus, whose stock gained 3.51% to EUR 12.08 at 1054 CET in Brussels trading on Monday.

(EUR 1.0 = USD 1.418)
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Publication:ADP News Belgium
Date:Jul 11, 2011
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