The Rs 3,200 crore Torrent Pharmaceuticals has bought the branded domestic formulations business of Elder Pharmaceuticals in India and Nepal for `2,000 crore on a slump sale basis.
It may be recalled that Elder was initially in talks with Sanofi for this deal. This transaction, that is one of the largest buy-outs in the Indian pharmaceuticals space, however disappointed the markets.
Analysts said that the deal has seen the transfer of Elder’s most profitable business to Torrent while the latter would take over a year to digest this acquisition.
The buy-out will see the transfer of Elder’s portfolio of 30 brands including market leading brands in the women’s healthcare, pain management, wound care and nutraceuticals therapeutic segments. It also includes the popular over the counter brand Shelcal.
A press release issued by the company said, the transaction will also involve the transfer of employees engaged in sales, marketing and operations of the India business. Further, under the transaction, Elder will continue to manufacture and supply the products at its existing manufacturing facilities for Torrent for three years.
Torrent will fund the acquisition through a mix of internal accruals and bank borrowings.
“The transaction is a strategic fit for Torrent and will strengthen its core prescription-based business. This acquisition strengthens our position in the Women Healthcare, Pain management and Vitamins/Nutrition segments by enhancing and accelerating market access. It is also expected to enable cost and revenue synergies in Torrent’s domestic formulations business” said Sudhir Mehta, Chairman, Torrent Group.
“This path-breaking domestic consolidation by Torrent addresses our recent challenges and will significantly help Elder de-leverage its balance sheet. We will now focus and grow our in-licensing, anti-infectives and exports business” said Alok Saxena, Managing Director and CEO, Elder. It has been approved by the Boards of both companies and is subject to shareholder approval. The two companies expect that the transaction will close in the first half of 2014.