Cheplapharm targets blockbuster IPO this year, sources say

By Arno Schuetze

FRANKFURT, March 25 (Reuters) - German pharma group Cheplapharm is planning to list on the stock exchange in the second half of the year in a deal that could value the company at 10-12 billion euros ($11.8-14.1 billion), including debt, people close to the matter said.

Cheplapharm has no research and development of its own, but buys established products from large pharma groups which it then produces with a lean manufacturing set-up.

JP Morgan, Deutsche Bank and Credit Suisse are expected to lead the initial public offering with the help of bookrunners such as Barclays and Citi , the people said, adding the official bank mandates are due shortly.

The Frankfurt stock market listing is likely to be kicked off in September or October, the people said.

Cheplapharm and the banks declined to comment or were not immediately available for comment.

Cheplapharm is expected to post adjusted earnings before interest, tax, depreciation and amortisation of about 800 million euros this year. In October, it told bond investors that its core earnings stood at 680 million in the previous 12 months. It has since completed major acquisitions.

Peers, such as Recordati and Dermapharm, trade at 15-18 times their core earnings.

Cheplapharm had net debt of 2.3 billion euros as of end-2020.

Earlier this year, Cheplapharm closed its largest acquisition so far, the purchase of products for cardiovascular and metabolic diseases from the Japan pharma group Takeda .

The deal was part of a massive shopping spree in recent years, mainly financed with high-yield bonds, which included purchases from AstraZeneca, Novartis, Roche and Sanofi.

In the last 25 years, the company acquired more than 100 products in deals valued at more than 3 billion euros altogether.

Cheplapharm, founded in 1998, is family-owned with 50 percent each owned by siblings Sebastian Braun and Bianca Juha, who also sit on the management board. ($1 = 0.8491 euros) (Reporting by Arno Schuetze; editing by Barbara Lewis)