Aspen Pharmacare’s share price continued to rally on the JSE, gaining more than 4 percent yesterday morning as the market welcomed the pending sale of Africa’s largest drug manufacturer’s milk formula business.
It has emerged that the New Zealand authorities have indicated that the sale of its infant formula business to French dairy group Lactalis International for 739.8 million (R11.76 billion) could be approved later this month.
Aspen said last month that it was waiting for the approval from New Zealand’s Overseas Investment Office to complete the disposal of this business to the Lactalis Group.
This was after the sale hit a snag last month, when Aspen announced that the deal was expected to be concluded at the end of May.
Aspen and the Lactalis Group have been mutually committed to working towards a closing date for this transaction, which was set for May.
But the delay saw the share price declining by more than 30 percent, and this triggered the stock’s biggest one-day slump in almost 21 years.
However, in the last five days the share price has recovered, by gaining more than 12 percent to trade higher at R103.98 a share yesterday afternoon. The stock was up from Friday’s opening price of R91.75.
Aspen Pharmacare shares closed 2.48 percent higher at R100.36 on the JSE yesterday.
Jordan Weir, a trader at Citadel, said the reiteration of the sale of Lactalis was circulated by media during Wednesday’s trading day.
“No official statements were given by either Aspen or Lactalis representatives, but the reminder of the upcoming conclusion of the sale, stemming from an unknown media source, seemed to trigger a few news-related trading algorithms into prematurely pricing in positive news of the closure of the deal, which has been earmarked for the end of May,” he said.
Weir added that the sale of its milk formula division appeared to have contributed towards Aspen’s recent share price rally, but was more of a psychological element rather than a material change or update.
Aspen sells products such as hormones, anaesthetics and antiretro- viral medicines in more than 150 countries.
In the results for the six months to end December, the Nutritionals business was already classified as a dis- continued operation and the related assets transferred to assets held-for-sale.
Aspen said the pending completion of the Nutritionals disposal would allow it to focus solely on pharmaceuticals.
Going forward, Aspen had embarked on a strategic review of its European and South African commercial pharmaceuticals businesses.