Dannex-Starwin merger to deliver more value ; Says Dannex
The Management of Dannex Limited, an indigenous pharmaceutical company, says it is hopeful that its combined force with Starwin Products Ghana Ltd will translate into about 40 per cent increase in turnover next year.
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Dannex, which has about 60 product lines, mostly over the counter (OTC), took over majority stake in the listed Starwin Products Ltd, which has seen sticky performances for several years.
The enlarged entity, which would be known initially as ‘Dannex-Starwin’ when merger processes are completed, is expected to yield important synergies such as enhanced staff capacity, brand strength and some economies of scale to further bite a larger chunk of the local pharmaceutical industry, which is currently dominated by about 70 per cent importation.
The company known for its flagship brand, Durol, became a 2.69 per cent shareholder in Starwin in December last year. It took advantage of the rights issue this year to increase its stake in the business when Starwin called for additional capital from its shareholders to execute its business plan and vision. Dannex emerged as the controlling shareholder of the company with 71.33 per cent stake in the manufacturer of the popular Andrews Liver Salt and 13 other products.
The Managing Director of Dannex, Mr Yaw Opare-Asamoah, told the Daily Graphic in Accra that the coming together of the two indigenous pharmaceutical companies would make a positive impact on the local and West African market and help the country reduce the high import of drugs into the market.
“For us, we recognise that two indigenous local entities can be a strong force in the marketplace. We are looking forward to working with this good brand to integrate our operations, subject to the approval of our boards. We hope this can make us leap into the West African market as well,” Mr Opare-Asamoah said.
He added that the company’s longstanding focus was to be a dominant force in the Ghanaian and West African markets, saying “together we will become a more attractive brand in the sub-region.”
Dannex was set up in May 1964 to manufacture and distribute pharmaceutical drugs and chemical products, which range from tablets, capsules, liquids (syrups and suspensions), powders, ointments, chemicals (disinfectants) and veterinary products.
As the new majority stakeholder, the management of Dannex sees great opportunities in Starwin which it wants to harness.
Synergies
“Starwin is a recognised brand. They have a good management team and staff capacity that we can integrate. There will also be synergies such as purchasing raw materials together,” the managing director of Dannex said.
Mr Opare-Asamoah gave the assurance that the staff of both companies – which would be initially known as ‘Dannex-Starwin’, in an attempt to keep the two enviable brand names – especially production staff, would not lose their jobs. he said, “we’re going to accommodate everybody, unless people are not willing to work with us,” he stated.
On the other hand, Dannex’s revenue is double Starwin’s; it has a stronger balance sheet and assets base and expansive customer service points and distribution channels, making it play in all key market segments.
Dannex also sells to The Gambia and two other West African countries, a footprint it is hoping to expand with the integration.
Already, the Durol manufacturer has rolled out a medium-term plan with which it intends to grow the business significantly. By that strategy, the company is expected to employ about 500 people directly by 2019.
“The fear of production workers losing their jobs is not there because we are still growing the business,” the managing director explained.
Mr Opare-Asamoah said in spite of investments already made in the last few years to expand the business at Dannex, the GH¢5.5 million it injected to take a commanding interest would also be ploughed back to expand the operations of the enlarged entity, which could become one of the largest indigenous pharmaceutical companies in the country in the next couple of months.
The top 10 shareholders of Starwin include: Mirfield Properties, the second largest shareholder with 7.80 per cent shares; Damsel and Anthony Oteng-Gyasi, third largest shareholder with 1.15 per cent.
Others are: E.H. Boohene Foundation and International Central Gospel Church, the fifth and sixth largest shareholders, respectively, with less than a percentage each.