Pharmaceutical manufacturer Aspen Pharmacare has confirmed that the sale of its infant milk business to French dairy company Lactalis will go through on May 31, injecting €740m into the debt-laden company.

Investors have punished the stock over delays in the deal that raised fears Aspen might not be able to reduce its debt, which at last count stood at R50bn. Key to the Lactalis deal going through was approval by regulators in New Zealand, who only gave the transaction the green light on May 17

Aspen’s stock rallied as much as 6.7% to R98.88 after the company’s announcement on the JSE’s news service at 9am, before falling back to trade at R93 at about 2pm.

Vestact portfolio manager Michael Treherne said the market had been anxious about clearance from the New Zealand regulatory authorities, but once that was given, investors had not anticipated any further hiccups.

Aspen announced the Lactalis deal in September 2018, disappointing investors who had hoped it would get a higher price for the infant milk unit. That news, combined with a dismal 3% growth in group revenue for the year to June, knocked Aspen’s shares to their worst intraday fall in two decades, wiping as much as 26% off its price before it recovered slightly.

Aspen is selling off other noncore assets to reduce its gearing, and announced last week that it expected to raise R1.9bn by selling a portfolio of products in Australia and New Zealand to US generic drug maker Mylan.

In December, Aspen entered into a distribution agreement with Mylan subsidiary Alphapharm regarding the portfolio of prescription and over-the-counter products sold mainly in Australia and New Zealand.

Mylan was also given an option to buy the portfolio for a maximum consideration of A$188m, of which A$93m is payable by the end of May, A$30m is due in January 2020, and up to A$65m is payable in September 2020.

The value of the last payment is partly contingent on Aspen's satisfying certain conditions.

“This divestment is in line with the group’s ongoing portfolio management approach and its stated intention to not only acquire value-enhancing products, but to also divest of noncore assets, thereby ensuring enhanced operational focus,” Aspen said. and