AMRI announced that it has signed a definitive agreement to acquire all outstanding shares of Cedarburg Pharmaceuticals for US$38.2 million in cash. The transaction, including US$2.8 million of assumed liabilities, is valued at US$41 million. Cedarburg Pharmaceuticals is a contract developer and manufacturer of technically complex active pharmaceutical ingredients (APIs) 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 CEO. "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."

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 US$19 million, with adjusted EBITDA between US$5.5 million and US$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 US$13 and US$14 million to AMRI's revenue in 2014. AMRI anticipates full year run-rate synergies of approximately US$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 US$0.06 to US$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.