African drugmaker Aspen Pharmacare has agreed to sell its infant formula business to French dairy group Lactalis for 12.9 billion rand ($865 million), looking to capitalise on the sector's recent flurry of dealmaking to reduce its debt and focus on core operations.
Investors, however, appeared unimpressed with the price tag. Shares in Aspen dropped more than 9 percent to 245.85 rand after Africa's biggest manufacturer of generic drugs announced the deal as it reported full-year earnings. Rising incomes in emerging markets coupled with global population growth have made infant formula an attractive proposition in a market dominated by Nestle, Danone and Reckitt Benckiser, which acquired Mead Johnson of the United States last year.
"The market expected Aspen to get $1 billion to $1.5 billion dollars," Cratos Capital equity trader Greg Davies said, adding that there is also some doubt over Aspen's stated growth expectations.