The former owner of Wagamama is close to clinching a deal to buy the generic drugs arm of DCC, a FTSE-100 conglomerate with operations spanning oil, retail and healthcare.
Sky News has learnt that Duke Street, one of Europe’s leading mid-market private equity firms, is to acquire DCC’s Kent Pharmaceuticals and Athlone Laboratories units.
Banking sources said the deal, which is worth an undisclosed sum, could be announced as soon as this week.
If confirmed, it would create a standalone business focused on manufacturing and distributing specialist off-patent and generic pharmaceuticals.
Kent, which was bought by DCC about six years ago, is a leader in types of medicine such as penicillins and analgesics, while Athlone makes a specialised strand of antibiotics in Ireland.
An insider said on Sunday that Duke Street would be backing Kent’s existing management team, which is led by Debashis Dasgupta, a former executive at big pharrma companies such as Ranbaxy and Sanofi.
The buyout firm also plans to install Kevin James, an experienced drugs industry executive who ran Wyeth Laboratories’ UK operations, as Kent’s chairman.
The deal comes at an intriguing time given the pharmaceuticals industry’s lingering anxieties about the prospect of a no-deal Brexit.
Uncertainty about trading and licensing arrangements with the EU have led to many companies being forced to establish new operations within the bloc and to stockpile products.
Duke Street’s purchase of the business from DCC would mark the latest in a series of so-called ‘corporate carve-out’ transactions engineered by the investment firm.
It previously bought a similar business, Baywater Healthcare, from a US-based multinational called AirProducts, which it then sold successfully two years ago.
Duke Street’s current fund has backed businesses including Great Rail Journeys, the provider of escorted train-based holidays.
Last year, it sold the Japanese noodle chain Wagamama to The Restaurant Group, the listed owner of Frankie & Benny’s.
That deal returned nearly three-and-a-half times its investors’ money.
Corporate carve-outs have become increasingly common for private equity firms hunting for unloved businesses within conglomerates that can be bought relatively cheaply and improved with a more determined focus under new owners.
The disposal of Kent represents a modest one for DCC, since the business is a small part of its healthcare division, which itself accounts for 13% of group profits.
DCC and Duke Street both declined to comment on Sunday.