UDG acquires STEM Marketing in €94m deal

UDG Healthcare has acquired STEM Marketing, a global provider of commercial and medical audits to pharmaceutical companies, in a deal worth up to £84 million (€94.3 million).

STEM operates across 35 countries with clients including 18 of the top 20 largest pharmaceutical companies.

In the aquisition announcement on Friday, the company was described as having had high margin business with strong growth in recent years.

By the end of 2015, STEM had gross assets of £13.5 million (€15 million) which generated EBITDA (earnings before interest, taxes, depreciation and amortisation) of £5.5 million (€6 million).

The deal is in keeping with UDG’s strategy to grow both organically and via acquisition with a focus on high growth areas.

It said the acquisition will be financed from existing cash facilities and is expected to be immediately accretive to earnings.

“STEM is an excellent strategic fit for UDG and is wholly aligned with our global growth strategy of expanding our market leading positions providing services to the pharmaceutical sector,” Brendan McAtamney, UDG Healthcare chief executive, said in a statement.

“The acquisition of STEM, a business with an established global footprint and strong growth opportunities, will enable us to provide new services to our clients, which are highly complementary to those already delivered by our Ashfield business.”

Rob Wood, STEM chief executive, said the company wanted "a partner who would help us to accelerate our global performance".

“Our new working relationship with UDG will not only facilitate geographic expansion but will also enable further client offerings and most importantly provide our employees with broader career options and widen our talent pool.”

In August, UDG said group revenue and operating profit were “well ahead” of 2015, in the nine months to the end of June. It reaffirmed its full-year guidance and signalled an appetite for further acquisitions.

The majority of the group’s operating profits are generated outside the UK.