HOCHDORF sells Pharmalys stake to Pharmalys Invest Holding

HOCHDORF Group Press Release: Sale of Pharmalys Laboratories SA

Hochdorf, 8 December 2019  – The Board of Directors of the HOCHDORF Group has sold its 51% majority stake in companies of the Pharmalys Group acquired at the end of 2016 to Pharmalys Invest Holding, controlled by Amir Mechria. With this move, HOCHDORF is taking an important step towards financial recovery and increasing its strategic flexibility. The cooperation between the HOCHDORF Group and Pharmalys Group is to be continued. Pharmalys Invest Holding remains the largest shareholder of the HOCHDORF Group.

At the end of 2016, the HOCHDORF Group acquired a 51% stake in three companies of the Pharmalys Group in the hope of accelerating the expansion of the baby care business. Around CHF 245 million were paid until March 2018, of which around CHF 114 million in cash and CHF 131 million in the form of a mandatory convertible bond. However, the business model of Pharmalys gave the HOCHDORF executive bodies little transparency in their operational implementation and little influence on relevant parts of the value chain. In addition, the financing of the net current assets of Pharmalys proved to be extremely capital-intensive.

After examining various options, the Pharmalys shares have now been sold. The agreement to sell the 51% shares in Pharmalys Laboratories SA, Pharmalys Africa Sarl and Pharmalys Tunisia SA to Pharmalys Invest Holding was signed on Friday evening, December 6, 2019, after market closing. The selling price is around CHF 100 million. The closing is expected within the next few days. The payment will be made in several installments until September 2020.

Focus on baby care remains unchanged
The focus of the HOCHDORF Group on the high-growth Baby Care division remains unchanged despite the sale of the Pharmalys shares. Pharmalys intends to continue marketing the Swiss baby food produced by HOCHDORF. In its own sales of baby food to end consumers, HOCHDORF will in future increasingly work with the traditional Swiss brand Bimbosan and the Babina brand.

Outlook With the sale of the Pharmalys investment, the HOCHDORF Group regains its strategic flexibility and takes an important step towards financial recovery. Due to the currently low sales in the Baby Care segment and the technical challenges posed by the new spray tower line in Sulgen, however, a clearly negative result is still expected for the current fiscal year.

Contact:
Dr Christoph Hug, Head of Corporate Communications HOCHDORF Group, Tel:+41 (0)41 914 65 62 / +41 (0)79 859 19 23, christoph.hug@hochdorf.com.

About the HOCHDORF Group:
The HOCHDORF Group, based in Hochdorf, achieved a consolidated gross sales revenue of CHF 561.0 million in 2018. It is one of the leading foodstuff companies in Switzerland, employing over 694 staff as of 31.12.2018.Made from natural ingredients such as milk, wheat germ and oil seeds, HOCHDORF products have been contributing to our health and wellbeing since 1895 – from babies to senior citizens. Its customers include the food industry and the wholesale and retail sectors. Its products are sold in over 90 countries. The shares are traded on the SIX Swiss Exchange in Zurich (ISIN CH0024666528).