Speciality pharmaceutical compancy Alliance Pharma is in demand today after announcing late yesterday that it has snapped up the rights to two high-margin brands from consumer products giant Reckitt Benckiser.
Alliance has bought the worldwide rights to nausea and vomiting treatment Buccastem and to Timodine, an anti-fungal skin cream, for a total consideration of £7.5m.
In 2008, total sales of the two brands were £2.6m and the majority of the sales of both brands were within the United Kingdom. Alliance predicts the acquisition will be "significantly earnings enhancing" in the first full year of ownership.
Shares in Alliance, which is listed on junior market Aim, are currently up 1.5p, or 9.4%, at 17.5p.
Jonathan Kwok, analyst at Numis has increased his 12-month price target for the shares to 20p from 17p following the acquisition announcement and highlights that Alliance remains committed to paying a maiden dividend this year.
He comments:
"We calculate the deal to be earnings accretive, even this year, demonstrating management's savvy opportunism, in addition to strong operational delivery where we have upgraded no less than three times to match impressive performance announcements."
