- \n
- \nProcaps Group is a family-owned Latin American pharmaceutical company established over 40 years ago that has grown into a leading integrated pharma company with a presence in 13 countries and product reach in 50 markets modernizing oral drug delivery technology and manufacturing capabilities.\n<\/li>\n
- \nProcaps Group\u2019s state-of-the-art manufacturing capabilities provide innovative delivery technologies protected by an extensive IP moat and supported by industry accolades such as the first FDA-approved pharmaceutical plant in South America for selling Rx products into the U.S.\n<\/li>\n
- \nProcaps Group today is the largest pharmaceutical contract development and manufacturing organization \u201cCDMO\u201d in Latin America and top 3 globally in terms of volume of softgel production capacity.\n<\/li>\n
- \nProcaps Group currently employs 5,000 people across 13 countries with a strong history and focus on ESG principles including resource-saving policies, HR and social programs and corporate policies.\n<\/li>\n
- \nProcaps Group generated gross revenue of $388 million and Adjusted EBITDA of $90 million in 2020 and is on track to reach $436 million in gross revenue and $105 million in Adjusted EBITDA in 2021. Procaps Group expects full-year Adjusted EBITDA margin expansion from 22% in 2019 to 26% in 2021 with strong positive free cash flow. Approximately 44% of Procaps Group revenue in 2020 was USD-denominated.\n<\/li>\n
- \nTransaction represents the first ever Latin American focused SPAC to include a fully committed and over-subscribed SPAC-related ordinary share PIPE.\n<\/li>\n
- \nTransaction is expected to enable further investment in growth and new product categories and positions Procaps Group to capitalize on favorable regional dynamics through organic growth in B2B & B2C segments.\n<\/li>\n
- \nTransaction also positions the Company to drive inorganic growth through a roll-up strategy focused on mid-sized companies in the region. The Company\u2019s M&A plan will focus on pharma and CDMO targets, as well as the possibility for transformational acquisitions in the future.\n<\/li>\n
- \nTransaction represents attractive entry valuation at 10.75X estimated 2021 EV\/EBITDA multiple versus global CDMO and pharmaceutical industry comparable companies.\n<\/li>\n
- \nCombined Company to have an implied initial enterprise value of approximately $1.1 billion, and expected to have an estimated $300 million in gross cash proceeds after closing, including a $100 million fully committed PIPE.\n<\/li>\n
- \nCombined Company strategically positions Procaps Group as a differentiated Latin American integrated pharma company leveraging a proprietary and proven M&A strategy that has the potential to deliver significant Adjusted EBITDA growth and margin expansion.\n<\/li>\n
- \nThe PIPE was raised from a broad group of Latin American investors, healthcare investors and thought leaders. These include pan-regional funds such as Compass Group and Moneda Asset Management, as well as Chilean-based Consorcio Seguros, among several other unnamed global and healthcare investors.\n<\/li>\n
- \nTransaction is expected to close in the third quarter of 2021, with the Combined Company expected to be listed on the Nasdaq Capital Market under the symbol \u201cPROC.\u201d\n<\/li>\n
- \nA joint investor conference call to discuss the proposed transaction will be conducted today, March 31, 2021, at 11:00 AM Eastern time.\n<\/li>\n<\/ul>\n
\n\u00a0\n<\/p>\n
NEW YORK & BARRANQUILLA, Colombia–(BUSINESS WIRE<\/a>)–
\nUnion Acquisition Corp. II (NASDAQ: LATN) (\u201cLATN\u201d), a special purpose acquisition company founded by Kyle P. Bransfield, today announced execution of a definitive business combination agreement along with a fully committed PIPE financing agreement with Procaps Group, a leading integrated international healthcare and pharmaceutical company, its newly created wholly-owned subsidiary, Procaps Group, S.A. (the \u201cCompany\u201d), and the Company\u2019s wholly-owned Cayman Island subsidiary (the \u201cMerger Sub\u201d). Following a series of transactions pursuant to the business combination agreement, Procaps Group and LATN will ultimately become wholly-owned subsidiaries of the Company (the \u201cCombined Company\u201d).\n<\/p>\n\nThe Combined Company will be led by Ruben Minski, Founder, Chairman of the Board and Chief Executive Officer of Procaps Group. The Company\u2019s ordinary shares (the \u201cProcaps Ordinary Shares\u201d) are expected to be listed on the Nasdaq Capital Market under the ticker symbol \u201cPROC.\u201d\n<\/p>\n
\nA group of leading investors has committed to participate in a PIPE to acquire $100 million of ordinary shares of LATN at $10.00 per share that will close simultaneously with the business combination. The Combined Company will also receive up to $200 million held in LATN\u2019s trust account at closing of the transaction, subject to any redemptions by existing LATN shareholders. Additionally, all Procaps Group shareholders\u2019 Procaps Ordinary Shares will be subject to a 6-month lock-up, subject to certain exceptions discussed in further detail below.\n<\/p>\n
\nAlejandro Weinstein is a London-based serial healthcare entrepreneur who will serve as chairman of a newly-formed M&A committee, and take a leadership position in guiding the Combined Company\u2019s M&A roll-up strategy.\n<\/p>\n
Procaps Group Highlights<\/b><\/p>\n
\n1. Founded in 1977, Procaps is a leading integrated international healthcare and pharmaceutical company with a successful history of growth and diversification.\n<\/p>\n
- \n
- \nLargest pharmaceutical integral CDMO (\u201ciCDMO\u201d) in Latin America and top 3 preferred supplier globally in terms of volume of softgel production capacity.\n<\/li>\n
- \nProprietary portfolio of branded Rx and OTC products and services sold, distributed or provided to over 50 markets with a focus on differentiated, strong margin and high barrier to entry products.\n<\/li>\n
- \nExtensive scientific expertise and robust pipeline with more than 500 formulations, developing more than 50 products per year with in-house R&D.\n<\/li>\n
- \nVertically and horizontally integrated to provide oral drug delivery technology and manufacturing capabilities at premium prices at competitive costs.\n<\/li>\n
- \n6 state-of-the-art manufacturing facilities in Latin America including first FDA-approved pharmaceutical plant in South America for selling Rx products into the U.S.\n<\/li>\n
- \nEmploys over 5,000 people across 13 countries with highly accomplished management team.\n<\/li>\n
- \nOver 30 patents granted (over 50 pending) and over 5,000 trademarks.\n<\/li>\n<\/ul>\n
\n2. Business Units\/Product Lines\n<\/p>\n
- \n
- \nSoftigel – iCDMO services specializing in Soft Gelatin Capsules (SGC) and derivative technologies.\n<\/li>\n
- \nFarma – Formulates, manufactures and markets branded prescription drugs.\n<\/li>\n
- \nClinical Specialties – Develops, manufactures and markets high-complexity drugs for hospital use.\n<\/li>\n
- \nVitalCare – Develops, manufactures and markets OTC consumer healthcare products.\n<\/li>\n
- \nDiabetrics – Provides integrated diabetes solutions.\n<\/li>\n<\/ul>\n
\n3. A leading regional player with strong diversification by product and geography positioned to drive regional consolidation.\n<\/p>\n
- \n
- \nApproximately 44% of Procaps revenue in 2020 was USD-denominated.\n<\/li>\n
- \nA leading player in both Colombia and Central America, which combined represents one of the largest pharma markets in Latin America.\n<\/li>\n
- \nWell positioned in key markets with attractive growth prospects due to favorable regional dynamics.\n<\/li>\n<\/ul>\n
\n4. Focus on organic and inorganic growth with increased margin expansion through agile business model that identifies and maximizes growth and time-to-market.\n<\/p>\n
- \n
- \nOver 600 new product launches estimated in the next 3 years.\n<\/li>\n
- \nWorking capital investment improves liquidity position to obtain important cost efficiencies.\n<\/li>\n
- \nGrowth from existing portfolio and entrance into new therapeutic areas \u2013 products with significant growth potential accelerate the current e-Health platform.\n<\/li>\n
- \nInternationalization of existing portfolio – on-going efforts to expand footprint of successful products outside of Colombia.\n<\/li>\n
- \nDevelopment of new, innovative pharma solutions – reliable and recognized track record on the development of new oral delivery technologies.\n<\/li>\n
- \nOrganic growth through capital deployed to capex improvement including:<\/p>\n
- \n
- \nCapacity expansion of new lyophilization production lines\n<\/li>\n
- \nPlant and operational improvements\n<\/li>\n
- \nImprove automatization processes\n<\/li>\n<\/ul>\n<\/li>\n
- \nInorganic growth through established M&A platform with a 43-year proven track record.\n<\/li>\n
- \nProcaps Group positioned to capitalize on favorable regional dynamics through M&A<\/p>\n
- \n
- \nEmerging pharma markets are fragmented \u2013 2nd<\/sup> & 3rd<\/sup> generation families\n<\/li>\n
- \nSynergies through innovation and economies of scale\n<\/li>\n
- \nSector expertise and technical knowledge\n<\/li>\n
- \nLower cost of capital and access to capital markets\n<\/li>\n<\/ul>\n<\/li>\n
- \nAlejandro Weinstein appointed Chairman of M&A Committee to lead roll-up strategy of mid-sized companies in Latin America.<\/p>\n
- \n
- \nPharma targets in Mexico, Central America and the Andean Region\n<\/li>\n
- \nCDMO targets in Mexico and Brazil\n<\/li>\n
- \nKey development areas including telehealth and digital health; ophthalmic products and therapeutic areas; and novel and orphan drug portfolios.\n<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n
\n\u201cFor more than 40 years, Procaps has developed integral pharmaceutical solutions for people\u2019s health, which has led it to become an important player within the Latin American pharmaceutical market,\u201d said Ruben Minski, Procaps Founder, Chairman and Chief Executive Officer. \u201cWe are very pleased to have support from top-tier investors, and access to the U.S. capital markets following the closing of this proposed transaction, which we believe will leave Procaps well-capitalized to provide our innovative pharmaceutical solutions to our global customers and drive our growth initiatives. Moreover, a key milestone was achieved in the transaction as it represents the first LatAm SPAC to have an over-subscribed PIPE in place from very sophisticated South American healthcare investors and U.S. based funds. This demonstrates the immense value they see in Procaps Group when you consider our discounted EV to EBITDA multiple versus industry comparables in the global CDMO sector and the combination of our strategic M&A strategy led by Alejandro Weinstein, a proven pharmaceutical rollup expert.\n<\/p>\n
\n\u201cWith our strong history and focus on Environmental, Social and Governance principles, we are confident we can provide shareholders with a multi-pronged investment alternative that supports today\u2019s healthcare needs and accomplishes this utilizing a sustainable footprint that we believe will deliver long-term value to your investment in Procaps. We look forward to opening a new chapter on our story that leverages:\n<\/p>\n
- \n
- \nOur global reach;\n<\/li>\n
- \nIn-house R&D capabilities driving attractive growth opportunities;\n<\/li>\n
- \nLeading integrated pharmaceutical CDMO specialized in softgels;\n<\/li>\n
- \nOur proprietary portfolio of branded Rx and OTC products;\n<\/li>\n
- \nStrategic positioning to capitalize on favorable regional dynamics; and\n<\/li>\n
- \nA 43-year proven track record of growth and diversification with a strong top-line and free cash flow financial profile,\u201d concluded Minski.\n<\/li>\n<\/ol>\n
\nKyle P. Bransfield, CEO of Union Acquisition Corp. ll added, \u201cProcaps has built a strong foundation for growth by its tested business strategy. Our business combination will fuel this expansion, with a significant focus on a strategic roll-up strategy that we believe will drive an accelerated competitive position and value creation. Regional emerging pharma markets are fragmented, and greenfield pharma projects in big emerging markets are slow and expensive. Accretive acquisitions in key development areas will create synergies through innovation and economies of scale and lower the cost of capital through diversification both geographically and by business units,\u201d concluded Bransfield.\n<\/p>\n
\nProcaps Group has assembled a seasoned team of over 5,000 employees, consisting of scientists, clinical, manufacturing, regulatory and commercial experts. Following the closing of the transaction, Mr. Minski and Mr. Bransfield will be joined by certain board members of Procaps Group to form the Combined Company\u2019s board of directors.\n<\/p>\n
Key Transaction Terms <\/b><\/p>\n
- \n
- \nPursuant to the terms of the business combination agreement: (i) LATN will merge with the Merger Sub and LATN\u2019s ordinary shares and warrants to purchase ordinary shares of LATN will be exchanged for Procaps Ordinary Shares and warrants to purchase Procaps Ordinary Shares, respectively; and (ii) the current shareholders of Crynssen Pharma Group Limited (\u201cProcaps Group\u201d) will contribute all of their shares of Procaps Group to the Company in exchange for Procaps Ordinary Shares and, in the case of the International Finance Corporation (\u201cIFC\u201d), one of Procaps Group\u2019s shareholders, Procaps Ordinary Shares and redeemable B shares of the Company, resulting in Procaps Group becoming a wholly-owned subsidiary of the Company following the consummation of such exchanges (i.e., the Combined Company).\n<\/li>\n
- \nUnder the terms of the proposed transaction, Procaps Group\u2019s shareholders will receive an aggregate of 97.1 million Procaps Ordinary Shares and, in addition to Procaps Ordinary Shares, IFC will receive 6 million redeemable B shares of the Company, in exchange for their existing Procaps Group ordinary shares, as contemplated by the terms of the business combination agreement.\n<\/li>\n
- \nAll Procaps Group shareholders\u2019 Procaps Ordinary Shares will be subject to a 6-month lock-up, with the exception of 4 million Procaps Ordinary Shares held by certain Procaps Group shareholders, which will be subject to a shorter lock-up expiring on the earlier to occur of the date that is 90 days from the date of the consummation of the business combination and the date which the last sale price of the Procaps Ordinary Shares equals or exceeds $12.00 per share for any 20 trading days within any 30-day trading period.\n<\/li>\n
- \nOf the Procaps Ordinary Shares issued to the Procaps Group shareholder in the exchange described above, 10,464,612 Procaps Ordinary Shares will be placed into an escrow account at closing of the transaction (the \u201cProcaps Escrowed Shares\u201d). 50% of the Procaps Escrowed Shares will be released to Procaps Group\u2019s shareholders if the last sale price of the Procaps Ordinary Shares equals or exceeds $12.50 per share for any 20 trading days within any 30-day trading period and the remaining 50% will be released to Procaps Group\u2019s shareholders if the last sale price of the Procaps Ordinary Shares equals or exceeds $13.00 per share for any 20 trading days within any 30-day trading period.\n<\/li>\n
- \nAs part of the transaction, LATN\u2019s founders have agreed to forfeit 2,875,000 of their private warrants. LATN\u2019s founders have also agreed to place 2,875,000 of the private warrants of the Combined Company they will receive in the business combination and 1,250,000 Procaps Ordinary Shares into an escrow account (together with the Procaps Ordinary Shares issuable upon exercise of the escrowed private warrants, the \u201cLATN Escrowed Shares\u201d). 50% of the escrowed warrants and 50% of LATN Escrowed Shares will be released to LATN\u2019s founder if the last sale price of the Procaps Ordinary Shares equals or exceeds $12.50 per share for any 20 trading days within any 30-day trading period, and the remaining 50% of the escrowed warrants and LATN Escrowed Shares will be released to the LATN founders if the last sale price of the Procaps Ordinary Shares equals or exceeds $13.00 per share for any 20 trading days within any 30-day trading period. For the avoidance of doubt, any Procaps Ordinary Shares released from escrow will remain subject to any applicable lock-up. The owners of the Procaps Escrowed Shares and the LATN Escrowed Shares (together, the \u201cEscrowed Shares\u201d) will retain their economic interests (such as rights to cash dividends, if any) in, and be able to vote, such Escrowed Shares while they remain in escrow.\n<\/li>\n
- \nThe Combined Company is expected to receive gross proceeds of approximately $300 million at the closing of the transaction assuming no redemptions by LATN\u2019s shareholders. Net proceeds to the Combined Company are expected to be approximately $215 million after transaction-related expenses and the redemption of the 6 million redeemable B shares of the Company held by IFC for a total cash payment of $60 million. Use of net proceeds would be to fund organic growth and consummate accretive acquisitions.\n<\/li>\n
- \nIn addition to the $200 million held in LATN\u2019s trust account (assuming no redemptions by LATN\u2019s shareholders), an additional group of top-tier healthcare investors has committed to participate in the transaction through an ordinary share PIPE of $100 million at $10 per share. As noted, this transaction represents the first ever Latin American focused SPAC to include a fully committed and over-subscribed SPAC-related ordinary share PIPE.\n<\/li>\n
- \nAssuming no redemptions by LATN\u2019s shareholders, excluding the Escrowed Shares and following the redemption of certain Procaps shares held by the IFC, it is estimated that the current shareholders of Procaps will own approximately 71% of the issued and outstanding shares in the Combined Company at closing.\n<\/li>\n
- \nTransaction value will be 10.75x EV\/2021E Adjusted EBITDA, implying an estimated pro forma enterprise valuation of US$ 1.1 billion based on an estimated Adjusted EBITDA for 2021 of $105 million and excluding the Escrowed Shares.\n<\/li>\n
- \nPost-transaction pro forma Net Debt\/Adjusted EBITDA reduced from 2X 2020 to minimal net debt 2021, assuming no redemptions and excluding the Escrowed Shares.\n<\/li>\n
- \nAs part of the transaction, the Procaps Group\u2019s current management and existing equity holders will roll nearly 100% of their equity into the Combined Company. All shareholders from the families will not have any secondary redemptions from the gross proceeds received. The transaction is expected to close in the third quarter of 2021.\n<\/li>\n<\/ul>\n
\nThe transaction has been approved by each of LATN\u2019s and Procaps Group\u2019s Board of Directors. The transaction is subject to the approval of LATN and Procaps shareholders and other customary conditions and is expected to close in the third quarter of 2021.\n<\/p>\n
\nAdditional information about the transaction will be provided in a Current Report on Form 8-K that will contain an investor presentation to be filed by LATN with the Securities and Exchange Commission (\u201cSEC\u201d) and will be available at www.sec.gov<\/a>. In addition, LATN intends to file a registration statement on Form F-4 with the SEC, which will also include a proxy statement\/prospectus, and will file other documents regarding the proposed transaction with the SEC.\n<\/p>\n
Advisors<\/b><\/p>\n
\nBTG Pactual acted as sole placement agent on the PIPE and financial advisor to LATN. Cantor Fitzgerald acted as capital markets advisor to LATN. Greenhill & Co., LLC acted as financial and capital markets advisor to Procaps Group. Linklaters LLP acted as legal counsel to LATN and Greenberg Traurig, LLP acted as legal counsel to Procaps Group in the transaction.\n<\/p>\n
Conference Call Details<\/b><\/p>\n
\nProcaps Group Chief Executive Officer Ruben Minski, Procaps Group Board Member & Chairman of M&A Committee Alejandro Weinstein and Union Acquisition Corp. ll Chief Operating Officer Daniel Fink will host the conference call. The conference call will be accompanied by a presentation, which can be viewed during the webcast or accessed via the investor relations section of Procaps\u2019 website here<\/a>.\n<\/p>\n
\nTo access the call, please use the following information:\n<\/p>\n
- \nEmerging pharma markets are fragmented \u2013 2nd<\/sup> & 3rd<\/sup> generation families\n<\/li>\n
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