Zentiva To Acquire 51 Pct. Stake In Sicomed For $102 Million

Prague and London 15 September 2005. Zentiva N.V. (Zentiva or the Company) announces today the signing of an agreement for the acquisition of 51% of S.C. Sicomed S.A. (Sicomed), the number 1 generics company in Romania via the acquisition of Venoma Holdings Limited (Venoma) for US$ 102 million in cash. Venoma is a holding company which owns a 51% interest in Sicomed, which is listed on the Bucharest Stock Exchange (BSE). The agreement with Venoma is subject to approval at a Zentiva shareholder meeting expected to be held in October 2005.

Zentiva intends to launch a Voluntary Tender Offer (“VTO”) for the remaining 49% of Sicomed’s shares at a price per share equivalent to US$ 0.4797 in cash, representing a 37% premium to the average closing Sicomed share price for the one month period ending 13 September 2005 and the closing exchange rate on that date. The VTO is subject to the approval of Zentiva shareholders and the Romanian National Securities Commission, and is expected to be complete around year end.

The aggregate acquisition consideration of US$ 200 million will be funded by a combination of Zentiva’s existing cash resources and new committed facilities.

Mr. Jiri Michal, Chairman and CEO of Zentiva, commenting on today’s announcement, said “The acquisition of Sicomed is in line with the strategy that we announced at the time of our IPO in 2004 of expanding into other key Central and Eastern European markets. Sicomed’s strong presence in the fast growing Romanian market, and in particular its unrivalled distribution network, will enable us to capitalise on our modern branded generic portfolio and deep product pipeline to build rapidly a clear leadership position in the primary care market. We believe this transaction will be of benefit to all of our Romanian stakeholders including the Government and patients, and Sicomed shareholders and employees.

“The experience we gained as a result of the acquisition of Slovakofarma in 2003 gives me great confidence that we will be able to ensure a smooth integration of Sicomed and realise the anticipated synergies from the acquisition, which will enhance our medium term earnings growth. The acquisition enhances our leadership position in the Central and Eastern Europe pharmaceutical market and provides us with an even stronger platform for organic growth and from which to pursue further acquisition opportunities. We look forward to welcoming the management and employees of Sicomed to Zentiva.”

Robert Luke and Mihalis Madianos, on behalf of Venoma Holdings, said “Venoma has gone a long way with Sicomed, helping it to reinvent itself, in an increasingly competitive and demanding market. We are delighted we have found a strong and capable partner in Zentiva and that the deal allows Sicomed to continue its development as part of an international pharmaceutical group.”

Background to the Offer

At the time of its IPO in June 2004, Zentiva stated that one of the key reasons for the Company going public was to raise funds to give it the financial flexibility to achieve its growth objectives. A key element of this strategy was to make strategic acquisitions to extend its growth opportunities in the markets of Central and Eastern Europe and beyond.

Acquisitions have already played a key role in the development of Zentiva, with the acquisition of Slovakofarma, the leading pharmaceutical company in Slovakia, in August 2003, providing the platform for the growth of the Company over the last two years. Over this period Zentiva has been able to derive significant economies of scale, which has boosted gross margins and allowed it to expand its sales and marketing reach in both Poland and Russia. In addition, it has enabled the Company to invest more efficiently in R&D to develop the new products that are central to its international growth strategy and its long term growth ambitions.

Given this success, Zentiva’s internationally experienced management has been seeking opportunities to strengthen the Company’s position in other growth markets in Central and Eastern Europe. By accessing these markets, Zentiva can benefit from the positive macroeconomic outlook in this region as well as the trend for increasing per capita healthcare expenditure.

The Romanian Market

The Romanian market represents one of the most promising growth opportunities for pharmaceutical companies in Central and Eastern Europe driven by strong GDP growth, structural market reform and preparations for EU accession. This positive macroeconomic environment, allied to the growing demands for improved healthcare from the country’s 22 million population, is expected to drive the rapid growth of the overall pharmaceutical market.

In addition, Zentiva’s analysis of the Romanian market suggests that the growth of the primary care market, the country’s established reimbursement system and the anticipated demand for more modern medicines are further attractions to gaining greater access to this market. This positive outlook and its own recent success in this market has provided the impetus for Zentiva to expand its presence in Romania.

Sicomed Romania’s Leading Generics Company

Sicomed is the leading Romanian generic pharmaceutical company with a product portfolio comprising primarily branded generics and OTC products. It held approximately 25% of the pharmaceutical market in terms of volume for the 12 months to June 2005, ranking it as number 1. Furthermore, Sicomed holds 5% of the total pharmaceutical market in terms of value. It has a broad product portfolio with CNS and alimentary being the largest therapeutic areas and significant presence in cardiovascular, anti-infectives and respiratory diseases.

Sicomed was listed on the BSE in 1998 and its privatisation was complete in 1999 with a majority of the company being acquired by a group of institutional investors. New management was brought into the company in 2002 and initiated a significant restructuring process including a rationalisation and modernisation of the company’s product portfolio and disposing of non-core business activities. The new management has succeeded in creating a substantially more efficient organisation by growing sales while at the same time significantly reducing Sicomed’s headcount.

In 2004, Sicomed generated gross sales of RON 181.1 million (US$ 55.7 million) and EBITDA of RON 34.8 million (US$ 11.1 million). For the six months ended June 30, 2005, Sicomed generated gross sales of RON 104.5 million (US$ 36.7 million) and EBITDA of RON 28.9 million (US$ 10.5 million).

Zentiva’s Enhanced Romanian Growth Opportunities

The combination of Zentiva and Sicomed creates a much stronger competitor in the fast growing Romanian pharmaceutical market. This will result from bringing together Zentiva’s portfolio of modern branded generics, which are designed to meet the needs of the primary care market, with Sicomed’s market leading distribution capability and long experience with the registration of new products.

Zentiva has already demonstrated the attractiveness of the primary care market opportunity through its existing Romanian organisation, having achieved the leading market position in the statin market with its product Simvacard within 6 months of launch. The transaction will create a platform for Zentiva to build one of the strongest and most effective Romanian sales forces. This sales force coupled with Sicomed’s distribution network will enable Zentiva to increase the rate of product introductions on the Romanian market.

Financial Implications

Zentiva expects that the acquisition of Sicomed will be significantly accretive to cash earnings per share in its first year and will increase the company’s earnings growth. In part, this positive impact will stem from the synergies that are anticipated as a result of the transaction.

A key element in the enhanced earnings growth will result from Zentiva introducing its higher margin modern branded generic products to the primary care market through the combined entity’s enhanced distribution capability in the Romanian market.

In addition, Zentiva expects to achieve annual cost synergies of up to US$ 6 million. These will be generated from improved sourcing of raw materials, enhanced production efficiencies, streamlined central management and by bringing further modern operating practices to the Sicomed business.

Zentiva believes that a combination of enhanced sales growth from higher margin products and lower operating costs will bring Sicomed’s operating profits in line with its own within the next three years.

Merrill Lynch International acted as exclusive financial adviser to Zentiva. ABN Amro Corporate Finance Limited acted as exclusive financial adviser to Venoma.

Company Contacts:

Petr ulc Chief Financial Officer Tel: +420 267 242 737 Alexander Marcek Corporate Finance Director Tel: +420 267 243 745

Media Contacts:

Citigate Dewe Rogerson Tel: +44 (0)20 7638 9571 David Dible david.dible@citigatedr.co.uk Chris Gardner chris.gardner@citigatedr.co.uk

Conference Call and Presentation Information

Zentiva will host a conference call on Thursday, 15 September 2005 at 09:30 (EST) / 14:30 (BST) / 15:30 (CET) to discuss the acquisition and a Question and Answer session will follow. A presentation will be available on Zentiva’s website www.zentiva.cz. Investors, analysts and other interested parties may access the conference call by calling +44 (0) 20 7365 1843 (UK and Europe) or +1 718 354 1152 (US). Following the conclusion of the call, a replay will be available on +44 (0) 20 7784 1024 (UK and Europe) and +1 718 354 1112. The passcode for the replay is 1594904.

There will be a live presentation in Czech in Prague at the Hotel Marriott, Prague 1, v Celnici 10 at 12 noon (CET).

About Zentiva

Zentiva is one of the largest generic pharmaceutical companies in Central and Eastern Europe. Zentiva focuses on developing, manufacturing and marketing new branded generic versions of modern pharmaceutical products, which the Company believes can be successfully introduced to the primary care markets of Central and Eastern Europe.


This document is not for release in Romania nor in the United States. This document does not, and is not intended to, constitute any invitation to participate in any potential tender offer which may be launched with respect to shares of Sicomed. Neither does this document preempt any decision to be taken by the Romanian National Securities Commission with respect to any such potential tender offer.

This document does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any shares or global depositary shares in Zentiva and/or Sicomed, nor shall it or any part of it nor the fact of its distribution form the basis of, or be relied on in connection with, any contract or investment decision. This communication is for information purposes only and does not constitute a public offer of securities in the Czech Republic or elsewhere nor any announcement of a public offer of securities in the Czech Republic or elsewhere.

For the purpose of Section 21 of the Financial Services and Markets Act 2000 of the UK ("FSMA"), any potential invitation or inducement to engage in any investment activity included within this document is directed only at (i) persons who are investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001 (as amended) of the UK (the "Financial Promotion Order"); (ii) persons who fall within Articles 49(2)(a) to (d) ("high net worth companies, unincorporated associations etc.") of the Financial Promotion Order; and (iii) any other persons to whom this document for the purposes of Section 21 of FSMA can otherwise lawfully be made (all such persons together being referred to as "relevant persons"), and must not be acted on or relied upon by persons other than relevant persons. Any potential invitation or inducement to engage in any investment activity included within this document is available only to relevant persons and will be engaged in only with relevant persons.

Zentiva's and Sicomed's ordinary shares and global depositary shares have not been and will not be registered under the US Securities Act of 1933 (the "Securities Act") and may not be offered or sold in the US except pursuant to an exemption from, or transaction not subject to, the registration requirements of the Securities Act.

This document contains "forward-looking statements". These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this document and include, but are not limited to, the following: statements regarding Zentiva's intentions, beliefs or current expectations concerning, amongst other things, the acquisition, its structuring, terms, financial impact, timing, rationale, and expected synergies, Zentiva's and/or Sicomed's results of operations, financial condition, liquidity, prospects, growth, strategies and the industries in which Zentiva and/or Sicomed operate. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances. Forward-looking statements are not guarantees of future performance and the actual results of the acquisition, Zentiva's and/or Sicomed's operations, financial condition and liquidity, and the development of the countries and the industries in which Zentiva and/or Sicomed operate may differ materially from those described in, or suggested by, the forward-looking statements contained in this document.

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