UNITED DRUG has bought the number two pharmaceutical contract packaging business in the US for $99 million (€62.3 million).

The acquisition of the Pennsylvania-based Sharp Corporation, for cash, significantly boosts United Drug's presence in the US and gives it a substantial foothold in the growing contract packaging sector there, analysts said. They said it was the largest acquisition to date by United Drug.

The company's share price jumped yesterday morning by 3 per cent on the news but ended the day flat on a generally good day for the Iseq.

Analyst Mark Kenny of K Capital Source said the contract packaging area was a growing business for United Drug. "It's a good areas to be in and this [acquisition] gives them a pretty significant foothold straight away."

The acquisition of the US company is subject to approval which is expected to take 30 days, at which point the cash will be paid over. The price is exactly equivalent to Sharp's revenue, or turnover, for 2007. No figures were available yesterday for Sharp's 2007 profits.

However, United Drug said the deal would be immediately accretive to earnings. It also said it would continue to have a strong balance sheet after the deal. At the time of its last reported results, for the period to March 2008, United Drug had a gearing of only 26 per cent.

In a statement, United Drug chief executive Liam FitzGerald said: "We are delighted to announce the acquisition of Sharp. Sharp is a quality and compliance leader in pharmaceutical contract packaging in the United States and will fit extremely well with our existing packaging operations that provide services to the same client base in most major markets in Europe.

"The acquisition will also provide a major platform for our on-going development as an international healthcare services company."

Sharp provides full-service packaging solutions, in compliance with strict regulatory requirements, to large pharmaceutical, generic, biotechnology, speciality pharmaceutical, neutraceutical and consumer healthcare companies. It employs approximately 600 people, including senior management, all of whom will remain with the business.

UDG already has significant experience in contract packaging with operations in the UK and Benelux - contributing an estimated 6 per cent of group earnings before interest, depreciation, tax and amortisation, said analyst Jack Gorman of Davy. "This should be well received," he said in a commentary.