Trygg Pharma Acquires EPAX

OSLO, NorwayIn a move that consolidates two leading suppliers of marine omega-3s, EPAX AS has been acquired by a new joint venture, Trygg Pharma, formed by Aker BioMarine ASA and an affiliate of Lindsay Goldberg LLC, a New York-based private investment firm. Formation of the joint venture was announced simultaneously with the acquisition of EPAX AS from Austevoll Seafood.

NewCo is the joint venture company that will own both Trygg Pharma AS and Natural Nutrition Development Ltd. AS (NND), which are currently wholly owned by Aker BioMarine. Lindsay Goldberg will pay up to NOK 280 million (US$45.8 million) for 50 percent of the stake in NewCo, half of which will be paid up front and half subject to hitting certain development milestones. Trygg Pharmas operations will be headed by Aaron Kramer, who will leave his position as Akers president of pharmaceuticals and omega-3 concentrates to become CEO. Egil Bodd, currently managing director of Lindsay Goldberg Nordic, will become chairman of Trygg Pharma; he worked previously at Merck & Co. and Pronova Biocare.

Under terms of the joint venture, Trygg Pharma AS will enter into a license agreement with Aker BioMarine to hold the exclusive right to develop krill-derived active pharmaceutical ingredients (APIs) based on Akers intellectual property. Akers net financial gains after costs an fees for the sale of 50 percent of NewCo to Lindsay Goldberg will be approximately NOK 360 million (US$58.9 million). Akers board of directors is also proposing to issue a total of 227,272,727 new shares to finance its NOK 250 million investment in the joint venture and acquisition of EPAX, which was announced simultaneously with the joint venture.

Trygg Pharma agreed to pay NOK 561 million (US$91.6 million) for 100 percent of the shares in Epax Holding AS, and will assume EPAXs net interest bearing debt of approximately NOK 314 million (US$51.3 million). EPAXs 2009 revenues were NOK 315 million (US$51.2 million). Under its new ownership, EPAX will immediately invest significantly in expanding its production capacity in its Alesund, Norway facility, as well as the Trygg Pharma production and development site in Hovdebygda. In addition, as part of the agreement between Trygg Pharma and Austevoll Seafood, EPAX entered into a long-term supply agreement with Austral S.A., a subsidiary of Austevoll Seafood, to secure its supply of high quality crude fish oil.

In a statement, Bjorn Refsum, managing director, EPAX, said: EPAX is fortunate to get an owner that will invest significantly in people, products, processes and technology in Alesund. This ownership change will be a great benefit to our customers and ensure further progress in the field of omega-3s."

Kramer, the new CEO of Trygg Pharma, commented in a statement: EPAX truly represents the finest of Norways fish oil manufacturing traditions. The people at EPAX have done a tremendous job in developing the company under dedicated Austevoll ownership, and we are excited to couple our team at Hovdebygda with the exceptional experience and competence in EPAX to make further progress in the field of omega-3s. We believe that the omega-3 supplement market will continue to have strong global market growth and EPAX is very well positioned in the premium quality segment."