Gresham exits Penn in a deal worth £80m

Gresham today announces that it has substantially exited from the leading pharmaceutical outsourcing services and manufacturing business Penn Pharmaceuticals.

The transaction comprised the sale of part of the manufacturing activities to US-based Celgene Corporation for £62.5m together with a secondary buy-out of the remaining business. The secondary buy-out was led by the incumbent chief executive, Craig Rennie, with Gresham retaining a substantial minority stake. RBS will continue to provide banking facilities to Penn.

Gresham backed the original management buy-out of Penn Pharmaceuticals in September 2000. Tredegar-based Penn was subsequently demerged into two separate companies to maximise the value of the business. The transaction represents an IRR of 75% and over 8x money on Gresham's original investment.

The company has restructured its core business and developed international markets, particularly the USA, Japan and South East Asia. These efforts culminated in Penn receiving the Queens Award for Enterprise 2003 for International Trade. Craig Rennie and his team, with the continued support of Gresham, now plan to focus on further developing the core services business to exploit Penn's strong market position in the growing international pharmaceutical outsourcing services market.

Following Gresham's investment, the business has grown substantially. Sales have quadrupled to £20m and the company has invested significantly in new facilities whilst creating more than 60 new jobs in South Wales.

Simon Inchley, a director of Gresham and a member of the board at Penn Pharmaceuticals, said: "We have worked very closely with the management since our investment and are delighted with this deal as it vindicates our original faith in the strength of the business and its management team."

Craig Rennie, CEO of Penn, said: "It has been a great pleasure to work with Gresham who have supported our business strategy and investment policy to build a company with international capabilities and an infrastructure for significant future growth."

The sale of Penn is the latest in a series of successful exits for Gresham - including the London Stock Exchange Listing of office2office, the sale of Dimensions Holdings Limited to Johnson Service Group plc and the sale of 1st Credit to Bridgepoint. The ten investments sold in 2004 have generated an average of 4x money.

Celgene, based in New Jersey, USA, is a pharmaceutical company with a major focus on the discovery, development and commercialisation of small molecules for cancer and immunological diseases.