Finally, the promoter of the local drug maker JB Chemicals succeeded in finding a buyer of their stake.
US private equity giant KKR has agreed to acquire about 54% stake in Mumbai-based drug, one of the oldest pharma companies in India, for Rs 3,100 crore. This is the second KKR investment in India in the past two months. In May, it agreed to invest Rs 11,367 crore ($1.5 billion) in Reliance Industries’ digital assets subsidiary Jio Platforms for a 2.32% stake, its largest investment in Asia till date.
KKR has agreed to acquire 41.7 million shares of JB Chemicals from the promoters at Rs 745 each, a premium of 4 per cent to the closing price of Rs 715.40 on the BSE on Thursday.
The deal will trigger an open offer for an additional 26% stake, the company said in a statement. If fully subscribed, KKR will end up paying Rs 4,600 crore for 80% of the company, making it arguably the largest PE buyout in Indian pharma sector.
However, KKR is not keen to own more than 65% of the company and will accordingly adjust the stake from the promoters depending on the success of the open offer, which would then translate to a Rs 3,750 crore ($500 m) payout for the fund.
At present, JB has a market cap of Rs 5,740 crore. The stock has appreciated 60% in the past three months in anticipation of a transaction.
The investment will be made through Tau Investment Holdings Pte, Tau Holdco Pte and KKR Asia III Fund Investments Pte.
After the acquisition, the management under JB Mody, JB Chemicals’ chairman and managing director, will continue to run the company.
Started as an active pharmaceutical ingredient (API) and formulations manufacturer in 1976, JB Chemicals ranks number 36 in the Indian drug market, with revenue of Rs 1,501 crore and a net profit of Rs 182 crore in FY19, according to pharma consultancy firm AWACS.
JB Chemicals owns India’s top ranitidine brand Rantac, which reduces stomach acid production. Three brands — Cilacar (calcium channel blocker), Rantac (anti-peptic ulcerant) and Metrogyl (amebicides) — feature among the top 200 in the country.
The company has a presence in 22 major therapeutic groups with 108 brands in the domestic market. In 2011, it divested its over-the-counter portfolio in Russia and other countries in the region to Johnson & Johnson. The company has a domestic sales force of 2,000 people.
This document is meant for the recipient only for use as intended and not for circulation. This document should not be reproduced or copied or made available to others. The information contained herein is from the public domain or sources believed to be reliable. While reasonable care has been taken to ensure that information given is at the time believed to be fair and correct and opinions based thereupon are reasonable, due to the very nature of research it cannot be warranted or represented that it is accurate or complete and it should not be relied upon as such. Also above note is not a recommendation to Buy or SELL and is only a view based on facts and figures and we will be in no way responsible for any losses incurred by anyone who uses this information to either trade or invests securities mentioned herein.