Tobacco Giant Philip Morris to Acquire Fertin Pharma for $820 Million

Philip Morris International Inc (PMI) has confirmed entering into a deal for DKK 5.1 billion (approximately USD 820 million) to acquire Fertin Pharma A/S, a leading developer and manufacturer of novel pharmaceutical and well-being products based on oral and intra-oral delivery systems.

The deal is set to advance PMI’s ambition to become a majority smoke-free business by 2025 and creates growth opportunities beyond nicotine.

Fertin Pharma is a privately held corporation with headquarters in Denmark, Canada, and India, employing over 850 personnel. It is a major contract development and manufacturing organization (CDMO) that specializes in the research, development, and manufacture of gums, pouches, liquefiable tablets, and other solid oral systems for the administration of active substances, including nicotine, where it is a leading manufacturer of Nicotine Replacement Therapy (NRT) solutions.

Jacek Olczak, Chief Executive Officer, Philip Morris International stated:

“The acquisition of Fertin Pharma will be a significant step forward on our journey toward delivering a smoke-free future—enhancing our smoke-free portfolio, notably in modern oral, and accelerating our progress in beyond nicotine.”

“Both PMI and Fertin share a commitment to science and consumer-centric innovations for better living, and I am delighted we have reached this agreement. Fertin’s diverse portfolio of technologies, evolving business mix, and world-class expertise will enrich our innovation pipeline and capabilities, providing speed and scale in oral delivery to support our 2025 goals of generating more than 50% of our net revenues from smoke-free products and at least USD 1 billion from products beyond nicotine.”

The company delivers scientific expertise and creative ideas, leading to expansion in new and existing business sectors expected to produce net revenues of DKK 1.1 billion in 2020. (approximately USD 160 million). Fertin Pharma’s 2020 EBITDA3 is valued at roughly 15 times the purchase value. Fertin Pharma is presently owned by EQT, a worldwide investment group, and Bagger-Srensen & Co., a private equity firm. Fertin Pharma will become a fully owned subsidiary of PMI once the deal is completed. PMI plans to fund the acquisition with existing cash and expects it to conclude in the fourth quarter of 2021, pending regulatory approval. The purchase will have no impact on PMI’s adjusted diluted EPS for the full year of 2021, according to the company.

Peter Halling, CEO of Fertin Pharma, commented:

“Fertin Pharma has been on a fantastic journey with EQT and the Bagger-Sørensen family as owners. With the new ownership in place, Fertin Pharma will be in a great position to continue delivering on our vision and mission, including our work as a CDMO for our customers. PMI is going through an inspiring transformation as a company with an ambition to deliver a smoke-free future and building a beyond nicotine product portfolio. An ambition that perfectly matches that of Fertin Pharma, namely to enable people to live healthier lives. In PMI we have found a new owner and partner who shares our vision, who is committed to science and who will enable Fertin Pharma to further accelerate and grow as a company.”

PMI furthers ambition to become a majority smoke-free business by 2025

PMI said earlier this year that by 2025, smoke-free goods will account for more than half of its entire net revenues. In addition to its ongoing commitment to a smoke-free future, the company is working on solutions that will enhance people’s lives and have a net positive influence on society.

With the acquisition of Fertin Pharma, PMI aims to gain substantial know-how for the development, formulation and commercialization of current and additional smoke-free platforms, including the ability to accelerate its presence in the fast-growing modern oral category, offering superior consumer experience through a broad range of smoke-free products such as nicotine pouches and lozenges. PMI will also be able to leverage on Fertin’s oral delivery platforms to access a range of promising technologies, complementary to PMI’s inhalation expertise, for scientifically substantiated botanicals and other self-care wellness products, including over-the-counter solutions and supplements that improve people’s lives in areas such as sleep, energy, calm, and focus.

The acquisition will also expand PMI’s overall platform of R&D and manufacturing expertise in nicotine and beyond nicotine product areas through the addition of Fertin’s strong capabilities and skilled workforce, including 80 scientists. Furthermore, PMI will be able to accelerate progress on key sustainability priorities, notably in broadening the reach and access of its smoke-free alternatives to adult smokers around the world to speed up the end of smoking and building a strong beyond nicotine business.

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