DE Pharmaceuticals targets £196m turnover following MBO

One of the UK’s biggest pharmaceutical wholesalers is targeting £196m turnover in three years after being bought by two of its directors, in one of the most significant deals seen in the North East healthcare sector for several years.

DE Group, based in Prudhoe, has been acquired by managing director Mark Gulliford and finance director Andy Wilson through a £37m management buy-out (MBO). The new owners are now targeting double digit growth over each of the next three years to help fuel the fast growing company’s progress further.

The business is the only short line wholesaler with distribution centres across the UK, and operates from 11 sites throughout the UK and Ireland.

In the past few years, it has grown significantly with the acquisition of Doncaster Pharmaceuticals, which operates across Southern England, and Eurodrug in Ireland, as well as seeing strong levels of organic growth. Also included in the group are National Generics in the Midlands, Eclipse Generics in Scotland and Crosspharma Pharmaceuticals in Northern Ireland.

Mark Gulliford, who has been with DE Group for 22 years, including a previous spell as owner, said the business, which employs 300 people and supplies to more than 4,500 pharmacies, is now set for a period of further organic growth to hit its £196m target by 2016.

The transaction was overseen by the specialist pharmacy team at Newcastle law firm Sintons, with funding to support the MBO provided by RBS Invoice Finance, which structured a £37m Asset Based Lending (ABL) package.

Mark Gulliford said: “Both myself and Andy are very much looking forward to taking DE Group to further levels of growth. It is a business and a sector we have unrivalled knowledge of, and after a period of acquisition, we are now on track to achieve 10 to 15 per cent growth each year for the next three years in a market where generic medicines account for more than 70% of all prescriptions.

“With strong support from Sintons, RBS and KPMG, the successful completion our MBO will allow us to focus on improving the already high levels of service that our customers rely on.

“As the UK’s largest independent distributor of generic medicines, more than 4,500 pharmacies benefit from our unrivalled buying power and the great deals we offer on a day-to-day basis.”

Christopher Welch, Partner in the Company and Commercial department at Sintons, led the team which completed the deal. Along with Alok Loomba, Partner in the Real Estate team and Associate Adrian Dye, the team is highly regarded across the North of England for its pharmacy expertise.

Christopher Welch said: “This transaction is one of the most significant deals in the region’s healthcare sector for several years, and allows the management team to further develop the potential of DE Group.

“DE Group intentionally maintains a low profile for its work, but from its base in Prudhoe, has become one of the leaders in its field across the UK and Ireland. We have every confidence that Mark and Andy, who have so effectively run the business for the past few years, will lead the DE Group to even greater levels of success.”

RBS Invoice Finance provided and structured the funding, with KPMG providing corporate finance advice. DLA Piper acted as advisors to RBS Invoice Finance.

Christian Mayo, Corporate Finance partner in KPMG’s Northern practice, said: “The management team are precisely the right people to lead the DE Group into a prosperous long term future. The business is well placed to exploit the growth in generic pharmaceuticals as increasing numbers of drugs come off patent. This deal represents a great result for DE Group’s thousands of retail pharmacy customers and takes the business back into independent hands where it will continue playing an important role in drug distribution throughout the UK and Ireland.”

Paul Goodchild, Corporate Development Director at RBS Invoice Finance, added: “DE Group has developed into a leading player in their field and the growth of the business is testament to the solid management team within which Mark and Andy have played a key role.

“The sale of the business to such experienced and well respected individuals marks a key milestone in the firm’s evolution as it embarks on a new journey of independent ownership. We wish them all the best in the future as the team enter their next stage of growth.”

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