Quantum md wants jobs to stay in the North East

Feb 3 2009 by Graeme King, The Journal

THE man who has led a £32.5m buy out of North East pharmaceuticals company Quantum Specials says he wants the company to be around for 150 years in the region.

Managing director Ian Edge said one of the key reasons for the deal being done, rather than being sold off, is he wants to keep all the jobs of the County Durham company in the North East.

Burnopfield’s Quantum was formed four years ago by managers of Eldon Laboratories in Newcastle after that company was bought out and moved wholesale to the south of England.

Mr Edge said he was determined that would not happen to Quantum, and has struck a deal for directors to acquire the business from Phoenix Medical Group with the backing of private equity house LDC (Lloyds TSB Development Capital) and Yorkshire Bank.

In a period where many businesses are struggling to get banks to borrow, the deal has been hailed as highlighting a sector of the economy which is not suffering in the recession, and where there is confidence about further growth and recruitment.

Quantum already employs around 150 people and Mr Edge said he expected to take numbers as high as 175 in the next year. The company posted annual sales of £22m for 2008, less than four years its first order.

Quantum Specials is one of the UK’s largest suppliers of tailor-made medicines to the pharmaceutical industry. It produces ‘specials’ – bespoke formulations which are not usually available from major drug manufacturers.

It is the same type of business operated by the Specials Laboratory in Prudhoe, Northumberland which owners Fiona Cruickshank and Brian Dougherty sold last November for £20.1m to Irish company United Drug.

Mr Edge said: “One of the key things with the MBO, rather than making a sale, was to keep the jobs in the North East. When Eldon was sold, they moved the jobs to the south of England, but we wanted to guarantee they stayed here. We now employ between 140 and 150 people, and that number has doubled in the last year. We expect to have 170 or 175 staff by the end of this year.

“Quantum will be here as long as I’m alive. I hope we’ve built a platform and we will be one of the old companies in 150 years.

LDC has invested £14m in Quantum Specials through a combination of loans and shares, and has a 47.5% stake in the business. Mr Edge has a 40.2% shareholding, and other directors make up the remaining 12.3%.

The deal has been supported by a £18.5m debt package from Yorkshire Bank Corporate and Structured Finance. John Swarbrick and Alex Bowden led the deal for LDC, with Mr Swarbrick taking a seat on the board.

LDC has also been behind the appointment of non-executive chairman Steve Stocks. He will be joined on the board by finance director Andy Scaife, who joins from KPMG in Newcastle, who advised on the deal.

BDO Stoy Hayward and Hammonds advised LDC on the buyout. Muckle LLP provided legal advice to management, while and KPMG and George Davies advised the vendors. Ernst & Young and CIL provided vendor due diligence.