JSE-listed Ascendis Health, which specializes in the distribution of healthcare and pharmaceutical products, sold its subsidiary Scitec International at a lower price than the purchase price. Acquired in 2016 for €170 million ($184.6 million), this product distribution unit was sold four years later at €5 million ($5.4 million); this represents a capital loss of about $179.2 million for the South African company.

By selling this Hungarian subsidiary, Ascendis is divesting itself of a “non-core asset” whose performance has gradually deteriorated in recent years due to strong competition in its industry, the erosion of its earnings and the departure of some key shareholders, the group explains in a note to investors. The proceeds from this transaction will enable Ascendis to reduce its debt level, improve its balance sheet and liquidity.

In its results published mid-March 2020 and covering the six months ending December 31, 2019, the healthcare group stated its intention to sell non-performing assets in the short term. The company said the measures are designed to reduce spending and improve liquidity by R55 million to R125 million over the next 12 months.

Chamberline Moko