Apotex Selling Shareholders Close C$850 Million Secondary Offering

Apotex Health Corp. said its selling shareholders have completed an upsized secondary offering of 25 million common shares at C$34 each, generating C$850 million in gross proceeds for the sellers. The shareholders were an affiliate of SK Capital Partners, API Investment LP, which Apotex refers to as Sherfam, and Allan Oberman. Apotex did not receive any of the proceeds.

The closing on September 18 followed a rapid expansion of the deal. Apotex initially announced a bought-deal secondary offering of about C$750 million on September 14, then increased it to C$850 million the next morning after citing strong demand. RBC Capital Markets, TD Securities and Scotiabank led the underwriting syndicate as joint lead bookrunners, with BMO Capital Markets and Jefferies serving as joint bookrunners.

Selling shareholders, not Apotex, receive the cash

The distinction between this sale and a new capital raise by Apotex is central to the offering. In its September 15 announcement of the upsized offering, Apotex said the net proceeds would be paid directly to the selling shareholders and that the company would receive none of them. The shares being sold were already held by existing investors, so the base secondary sale transfers ownership rather than adding cash to Apotex’s balance sheet.

The September 15 terms also gave the underwriters an option to purchase as many as 3.75 million additional shares at C$34, equal to 15% of the 25 million-share base offering. The option can be used to cover over-allotments and for market-stabilization purposes during the 30-day period following closing. Friday’s announced closing covered the 25 million shares in the upsized base offering.

Apotex offered the shares through a prospectus supplement to its August 18 final short-form base shelf prospectus in Canada. The company also said the shares could be offered through private placements in the United States and internationally where permitted by applicable securities laws.

SK Capital’s stake falls below 44%

SK Artemis Holdings II, a fund managed by SK Capital, accounted for most of the shares sold. Before the offering, it held 119,643,514 Apotex common shares, representing about 52.4% of the outstanding shares on a non-diluted basis. The disclosed terms called for SK Holdings to sell 19,252,009 shares at C$34, producing about C$654.6 million in gross proceeds.

After the base offering, SK Holdings was expected to retain 100,391,505 shares, or about 43.8% of Apotex’s outstanding common shares on a non-diluted basis. If the underwriters exercise the additional-share option in full under the previously announced terms, SK Holdings would sell another 2,887,802 shares and its stake would fall to about 42.6%.

Sherfam entered the offering with 32,414,910 shares, equal to about 14.2% of the company on the same basis. It agreed to sell 5,215,929 shares for gross proceeds of about C$177.3 million, leaving it with 27,198,981 shares, or roughly 11.9%, after the base sale. Under the full over-allotment scenario disclosed by Apotex, Sherfam’s holding would decline to 26,416,592 shares, or about 11.5%.

Both SK Holdings and Sherfam received limited waivers of lock-up agreements entered into around Apotex’s June initial public offering for the sole purpose of completing the secondary sale. Apotex’s September filing also said both investors remain subject to applicable securities laws and other shareholder and lock-up arrangements described in the company’s offering documents.

The sale comes three months after Apotex’s IPO

The secondary offering follows Apotex’s June debut on the Toronto Stock Exchange under the ticker APTX. The company closed an upsized IPO on June 16 involving 62,291,670 shares at C$24 each, for total gross proceeds of about C$1.495 billion. Of those shares, 35,416,666 were sold by Apotex itself for almost C$850 million in gross proceeds, while existing shareholders sold 26,875,004 shares for about C$645 million.

That June structure was materially different from the September sale because a large portion of the IPO was a treasury issuance that raised money for Apotex. In its first-quarter results released in August, the company said it had applied C$800 million of IPO proceeds to debt repayment. By contrast, the C$850 million from the latest secondary offering goes to the selling shareholders.

The latest C$34 offering price is C$10 above Apotex’s C$24 IPO price, an increase of about 42%. That comparison describes the two offering prices and should not be read as a measure of Apotex’s share-price performance at a particular trading time.

Apotex reported C$848 million of revenue for the quarter ended June 30, down 26% from a year earlier on a reported basis as the prior-year period included revenue from generic Revlimid that was no longer present. Adjusted EBITDA was C$259 million, with a 31% adjusted EBITDA margin, while Canadian revenue rose about 11%. The company maintained fiscal 2027 guidance for upper-mid-single-digit revenue growth excluding the U.S. contribution from generic Revlimid and an adjusted EBITDA margin of about 30%.

The next mechanical item tied to the share sale is the over-allotment option established in the September 15 terms. If the underwriters exercise some or all of that option during the permitted period, the selling shareholders’ proceeds would increase and the disclosed ownership positions of SK Holdings and Sherfam would decline further.