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Richter acquisition creates largest drug company in central Europe

Hungary's largest pharmaceutical company Richter will purchase Polish-headquartered Polpharma for USD 1.3bn through newly issued Richter shares

Hungary's largest pharmaceutical company Richter has revealed it will purchase Polish-headquartered Polpharma for HUF 231bn (USD 1.3bn) through newly issued Richter shares.

Richter added that Polpharma's owner Genefar would acquire a stake of around 25 per cent in Richter.

When Richter and Polpharma merge, it will be the largest entity in the central European region, with a pro-forma market capitalisation of HUF 923bn (USD 5.3bn).

Polpharma is Poland's largest generic drug producer. Richter says that it expects annual income of around USD 35m from the deal, which requires the approval of Richter shareholders at an extraordinary meeting to be held on 18 December.

Separately, Richter said it had agreed to buy an 80.6 per cent stake in Russian firm OAO Akhirin for HUF 22bn, to be paid for with 593,684 Richter shares. The transaction is not subject to shareholder approval, but it is conditional on the takeover of Polpharma.

Genefar is part of the investor group which owns Akhirin, and after this deal its stake in Richter will rise to 26.8 per cent. Genefar has agreed not to sell 80 per cent of its initial shareholding in Richter for a period of four years and not to sell 60 per cent of its initial shareholding for a period of five years.

Richter has agreed to pay Genefar a fee of USD 40m, if the deal is not approved by its shareholders while Genefar has agreed to pay Richter USD 40m, if it fails to complete the transaction after it has been approved by Richter shareholders.

The transaction should complete in Q1 2008.

30th September 2008

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