UDG Healthcare buys two US-based businesses for up to $82.4m

Create NYC is a healthcare creative communications agency which offers the tactical execution of sales and marketing materials for its international pharmaceutical clients. UDG said the company's offering comprises a unique, disruptive model which gives its clients high impact, on-demand flexible marketing support with a flat fee structure.

The business is being bought for up to $58.4m, with $17m paid upfront and an earn-out of up to $41.4m over five years.

For the year to the end of December 2017, Create had gross assets of $9.1m, which generated operating profits of approximately $7m.

SmartAnalyst is a strategic consulting and analytics business focused on the pharmaceutical and biotech sector. It is being bought for up to $24m, which includes an initial consideration of $18m, with an earn-out of up to $6m payable over the next three years, based on the achievement of agreed profit targets.

Both transactions will be financed from existing cash and debt facilities and are expected to be earnings accretive.

Chief executive officer Brendan McAtamney said: "We are delighted to announce these two acquisitions, which further expand the services we offer our healthcare clients. Create NYC adds innovative, creative services within Ashfield Communications and SmartAnalyst expands Ashfield's advisory pillar, adding new capabilities in strategic consulting and the high growth area of health economics and outcomes research.

"Both transactions meet all of UDG's acquisition criteria - they are a good strategic and cultural fit; meet our target financial hurdle rates; and involves an expansion of our current capabilities."

UDG also announced that Chris Corbin, founder of Ashfield and previously CEO of the division, will remain on the board as a non-executive director after his retirement from Ashfield this year.

Liberum said these are two innovative and earnings accretive deals that should be well-received, particularly given the low upfront multiple, while the retention of Chris Corbin on the board is a key move to ensure the entrepreneurial culture at Ashfield remains intact.

"We expect the shares to outperform after a recent period of weakness," it said.