IMM agrees $413m Korea pharma acquisition
IMM Private Equity has agreed to acquire Korea Kolmar Holdings’ pharmaceutical contract development and manufacturing organization (CDMO) for KRW512.5 billion ($413 million).
The Korean conglomerate will receive KRW336.3 billion for one portion of the CDMO business, with the toothpaste division excluded from the deal, according to a filing. Separately, IMM will pay KRW176.2 billion for a 62.1% stake in KolmarPharma, another CDMO operation with a slightly different focus. The private equity firm will increase its holding to 85% by acquiring additional shares from members of the management team.
Both investments will come from IMM's fourth Korea buyout fund, which is in the market with a target of $1.5 billion. A first close of $1.3 billion came last year.
Kolmar describes itself as an original development and design (ODD) business. It combines traditional original equipment manufacturing (OEM) functions with expertise in product development, packaging design, and distribution, providing an end-to-end service to brands. The company specializes in cosmetics, pharmaceuticals, and health foods.
The pharmaceutical division was established in 2002 – 12 years after the company was founded – and produces a range of prescription and over-the-counter drugs. It also manufactures lens cleaner, hand sanitizer, toothpaste, mouth wash, anti-hair loss shampoo, and vitamin products. Kolmar Korea claims to be the largest pharmaceuticals CMO in Korea. About two-thirds of revenue come from prescription drugs.
Kolmar Korea bought a majority stake in local drug developer CJ Healthcare for around KRW1.3 trillion in 2018. The company's outsourced CMO operations were absorbed by Kolmar Korea. Other acquisitions in recent years include ODM operations in the US and Canada, while the company has also expanded its China subsidiary.
Kolmar Korea generated sales of KRW545.8 billion in 2019, down from KRW667.5 billion the previous year. Net profit fell from KRW53.2 billion to KRW45.5 billion. The CMO business contributed KRW165.5 billion in sales and KRW17.6 billion in operating profit last year. Sales from KolmarPharma came to KRW93.9 billion in 2019, up from KRW78.4 billion in 2018, while net profit rose from KRW14.6 billion to KRW18.1 billion.
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