Aspen Slumps Most in Four Months After Blow to Debt-Cut Hopes

(Bloomberg) -- Aspen Pharmacare Holdings Ltd. fell the most in four months after the South African drugmaker said talks to sell a European business had ended, a blow to investors looking for progress on debt reduction.

Aspen tumbled as much as 7.8% in Johannesburg, the most since March 8. The Durban-based company said Friday discussions with a potential partner for its European Commercial Pharmaceuticals business that it announced to the market on May 22 were over.

Some investors may be concerned that today's news “may delay the company's turnaround going forward,'' said Lester Davids, an analyst at Unum Capital. “It's high debt burden continues to weigh on the company's shares and thus no strong bids on the share price have been evident as uncertainty continues to linger.”

Aspen's net debt rose to 53.5 billion rand ($3.8 billion) at the end of December, the company said in March. Chief Executive Officer Stephen Saad, who owns 12% of the company, said at the time that “if we can de-gear quicker, we would like to.” The company has said it will look to exit some businesses, to focus on selling hormones, anesthetics and anti-retrovirals in emerging economies. Aspen sold its infant-formula business to Lactalis International earlier this year for 740 million euros ($833 million), a deal that was delayed by regulatory approvals.

“Aspen has a very strong management team with vested interests and large personal shareholdings, and thus they would remain committed to finding the best solution to help turn the ship around,” Unum's Davids said. “In the short term and in the absence of positive news flow, we may however continue to see the shares under pressure as the market assesses options the company may have.”

Aspen was 6.5% lower as of 1:33 p.m. in Johannesburg, taking its decline this year to 27%.

--With assistance from Janice Kew.

To contact the reporter on this story: Adelaide Changole in Nairobi at achangole2@bloomberg.net

To contact the editors responsible for this story: Blaise Robinson at brobinson58@bloomberg.net, John Viljoen, Jon Menon

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