AMRI signs definitive agreement to acquire all outstanding shares of Cedarburg Pharmaceuticals

AMRI (NASDAQ: AMRI) today announced that it has signed a definitive agreement to acquire all the outstanding shares of Cedarburg Pharmaceuticals, Inc. for $38.2 million in cash. The transaction, including $2.8 million of assumed liabilities, is valued at $41 million. Cedarburg Pharmaceuticals is a contract developer and manufacturer of technically complex active pharmaceutical ingredients (API's) for both generic and branded customers. The transaction is consistent with AMRI's strategy to be the preeminent supplier of custom and complex drug development services and product to both the branded and generic pharmaceutical industry.

"We are very excited to be joining efforts with Cedarburg as they bring a unique blend of expertise in complex API, a scalable business infrastructure and extensive customer relationships that will augment our existing capabilities and services," said William S. Marth, AMRI's president and chief executive officer. "This transaction represents an important first step in building out our API capabilities, broadens our offerings and customer base and provides us with an ideal platform to pursue additional value creation opportunities."

Located in Grafton, Wisconsin, Cedarburg Pharmaceuticals is a trusted, long-time partner to many of the industry's leading pharmaceutical companies and is well respected for its expertise in developing technically differentiated APIs, its reliability of supply and track record of quality. Cedarburg's core capabilities include controlled substances, steroids, prostaglandins, vitamin D analogs, conjugation chemistry and inorganics for the analgesic, ophthalmology and oncology therapeutic areas. Cedarburg has provided API development and manufacturing support for 13 approved products. Cedarburg's attractive development pipeline includes multiple late stage products and is expected to be an important contributor for future growth.

On a stand-alone basis, Cedarburg's forecasted full year 2014 revenue is approximately $19 million, with adjusted EBITDA between $5.5 million and $5.7 million, implying a purchase price multiple of approximately 2 times 2014 revenue and approximately 7 times 2014 adjusted EBITDA at the midpoint of the range. Adjusted EBITDA excludes any deal related costs or purchase accounting impacts.

The transaction is expected to close in early April 2014. Based on the anticipated timing of the close, the acquisition is expected to add between $13 and $14 million to AMRI's revenue in 2014. AMRI anticipates full year run-rate synergies of approximately $1.5 million of EBITDA within 12 months of closing and the acquisition is expected to be accretive to AMRI's 2014 adjusted diluted EPS in the range of $0.06 to $0.07 per share. Items excluded from non-GAAP financial results are expected to include all transaction-related costs, including amortization of intangible assets. The acquisition and associated fees are expected to be financed through cash currently held by AMRI.

Cedarburg is expected to continue to operate independently within AMRI's API business unit. Chuck Boland, currently co-founder and executive vice president of business development will lead the Cedarburg team and report into George Svokos, AMRI's senior vice president sales and general manager - API.

Use of Non-GAAP Financial Measures

This press release contains non-GAAP financial measures, such as EBITDA and adjusted diluted EPS, which are adjusted to exclude, among other things, the impact of interest income and expense, depreciation and amortization expense, and income tax expense or benefit. We exclude these items from the non-GAAP financial measures because they are outside our normal operations. There are limitations in using non-GAAP financial measures, as they are not prepared in accordance with generally accepted accounting principles, and may be different than non-GAAP financial measures used by other companies. In particular, we believe that the inclusion of supplementary non-GAAP financial measures in this press release helps investors to gain a meaningful understanding of our core operating results and future prospects without the effect of these often-one-time charges, and is consistent with how management measures and forecasts the Company's performance, especially when comparing such results to prior periods or forecasts.  Non-GAAP results also allow investors to compare the Company's operations against the financial results of other companies in the industry who similarly provide non-GAAP results. The non-GAAP financial measures included in this press release are not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Cedarburg Pharmaceutical's projected 2014 EBITDA and the contribution to AMRI's adjusted diluted EPS are only provided on a non-GAAP basis. It is not feasible to provide reconciliation to the most comparable projected U.S. GAAP measure because the excluded items are difficult to predict and estimate and are primarily dependent on future events.

Conference Call and Webcast

AMRI will hold a conference call at 10:00 a.m. ET on Monday, March 24, 2014 to discuss the transaction. The conference call can be accessed by dialing 888-455-2260 (domestic calls) or 719-325-2464 (international calls) at 9:50 a.m. ET and entering passcode 6793528. The audio webcast will be available live via the Internet and can be accessed on the company's website at www.amriglobal.com. Replays of the audio webcast can also be accessed for up to 90 days after the call via the investor area of the company's website at www.amriglobal.com/investor_relations/.