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30 November 2003
Scotland on Sunday
Inveresk bosses cash in on £135m windfall

DRUGS firm boss Walter Nimmo, a former Scottish entrepreneur of the year, has landed a £2.8m windfall after selling part of his stake in the Nasdaq-listed Inveresk Research.

The chief executive of the Tranent-based firm has this weekend cashed in as part of a successful £135m share sale on the US exchange.

Candover, the venture capital group, was the biggest beneficiary, selling just over half of its Inveresk stake for £102m.

Candover bought its share in the East Lothian company for £27.5m in 1999 and invested in three years of expansion. It will retain a 20% stake in the business.

The share issue, first revealed in Scotland on Sunday on November 9, also raised £12m in new development capital for Inveresk, which tests drugs on people and animals for the world’s biggest pharmaceutical groups. Nimmo, who ran Inveresk as a research laboratory before its takeover by SGS of Switzerland in 1989, will retain a 3.6% stake in the company worth £16m. He was named entrepreneur of the year in 2002 by the Entrepreneurial Exchange after steering the company through a flotation on the Nasdaq exchange.

Several other directors took the opportunity to sell part of their holdings. Ian Sword, the former chairman of Scottish Enterprise Edinburgh & Lothian, took £1.4m but held on to a 1.6% slice worth £7m. Chief financial officer Paul Cowan cleared out his entire stake in the company for £710,000.

Executive vice-presidents Brian Bathgate and Alastair McEwan landed £395,000 and £340,000 windfalls respectively. Fellow board member John Urquhart sold £124,000 through his family trust.

The share sale has left Inveresk’s management team with 6% of the company, giving investors who have come in since 2002 a clear majority for the first time.

Inveresk cancelled a previous issue this spring after its share price took a dive. Market conditions have improved since then and the company’s stock has almost doubled since a low point in March.

The company employs 1,000 in Scotland, principally at its headquarters in Tranent and a new pre-clinical testing centre in Edinburgh.

Nimmo and his fellow directors have been praised for creating Scotland’s biggest home-grown medical science company.

But the management team was questioned in the US earlier this year for accepting pay rises of up to 158%. Nimmo’s package, which rose by 66%, included a £420,000 bonus, a £10,000 car and fuel allowance and a £230 clothing allowance.

Inveresk’s decision to list in the US rather than the UK was partly caused by fear of attack from animal rights activists who object to its use of living creatures in experiments.

The tests which it carries out are required by law before medicines can be provided to patients.

The company’s big step forward took place in 2001 when it bought the US and Canadian testing group ClinTrials for £79m. In July this year it snapped up PharmaResearch of the US for £23m.

Michael Ankcorn, who joined Inveresk from ClinTrials, sold his entire £316,000 holding in the company and a further £316,000 worth of options as part of last week’s share sale.

Inveresk’s pre-tax profits for the three months to September rose by 23% to £6.3m on sales up 26% at £41.5m. But it warned that fourth quarter results would be affected by a 'sub-optimal business mix' in North America.

Almost half of Inveresk’s 2,600 employees are based in Canada. It also carries out medical trials in Belgium, Italy, France, Israel, Poland, Spain, the Czech Republic and Germany.

Its largest rival is US-based Quintiles, which has facilities in Edinburgh, Bathgate and Livingston and was recently taken private by its founder Dennis Gillings.


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