Quantum leap for pharmacy firm in buy-out

Quantum Specials, one of the UK’s largest suppliers of tailor-made medicines to the pharmaceutical industry, has undergone a management buy-out backed by £32.5 million funding from private equity house LDC and Yorkshire Bank.

Yorkshire Bank Corporate & Structured Finance provided a total of £18.5 million in debt funding and working capital facilities to support the transaction. LDC has invested £14 million through a combination of loans and shares. A management team, led by managing director Ian Edge, has also invested in shares in the company.

Based in Burnopfield, County Durham, the company supplies ‘specials’ – bespoke formulations which are not readily available from drug manufacturers – to pharmacies, doctors, hospitals, wholesalers and veterinary surgeries across the UK.

Quantum Specials was formed in 2004 by the former management team of Eldon Laboratories, near Durham. Eldon had been sold by Unichem to new owner Martindale, which decided to relocate the business to its existing premises in the South. Quantum Specials provided work for many of the former Eldon employees and has also created new jobs in the area.

The business has grown rapidly due to its focus on quality of service and the rising demand for its products. It now employs over 100 people and is forecast to generate sales of £22 million this year.

It can provide products in just 24 hours from the initial pharmacist’s order, through to manufacture and delivery to the patient. It currently has over 12,000 formulas on its database and around 20 more are added to the range each week. The medicines are manufactured at its 66,000 sq ft site which includes state of the art clean room facilities and where in excess of 600 orders per day are processed.

The transaction will provide an exit for corporate shareholder Phoenix Medical Supplies and a number of the founding shareholders.

Leading the deal from Yorkshire Bank’s Corporate and Structured Finance team in Leeds were directors Mike Selina and Robin Womersley.  Mike Selina, who structured the deal for the bank, said: “Quantum Specials has a leading position in a market sector that is not affected by the adverse economic conditions. Demand for ‘specials’ is growing at around 10 per cent a year, driven by an ageing population and the consolidation of the retail pharmacy market.

“While this is a significant deal in the current climate, it is also an excellent opportunity for us to support an existing Yorkshire Bank client and invest in a business which has very positive growth prospects.”

BDO Stoy Hayward and Hammonds advised LDC on the buyout of Quantum Specials. Eversheds provided legal advice to Yorkshire Bank. Muckle LLP provided legal advice to management and KPMG.  George Davies advised the vendors.  Ernst & Young and CIL provided vendor due diligence.

For further information contact:
Sam Dabbs, Dabbs PR & Marketing, Tel. 07711 672893      
    
Alison Puente, Yorkshire Bank, Tel. 0113 807 2701