Nirma made major contribution to pharma; Acquires 75% stake in Glenmark Life Sciences for Rs 5,651 crore

With this acquisition, Ahmedabad headquartered Nirma Group, founded by Dr Karsanbhai Patel, has entered the API segment. Glenmark Life Sciences’ parent company Glenmark Pharma will use the proceeds from the deal to repay debt.

Chemicals-to-building-materials diversified conglomerate Nirma has entered into a definitive agreement to acquire 75 per cent stake in listed API (active pharmaceutical ingredient) company Glenmark Life Sciences at a price of Rs 615 per share for Rs 5,651 crore.

The deal comes at an enterprise value of around Rs 7,500 crore and Nirma will make a mandatory open offer to all public shareholders of the target as per SEBI regulations. Glenmark Pharma, the parent company of Glenmark Life Sciences, will own 7.84 per cent in Glenmark Life Sciences after the disinvestment.

On May 23, 2023, Moneycontrol first named Nirma as a contender in the sale process of Glenmark Life Sciences, which was initiated to reduce the debt burden of Glenmark Pharma.

Glenmark Strategy: Strategies vs PE Firms

Commenting on the disinvestment, as part of an official statement, Glenn Saldanha, Chairman and Managing Director, Glenmark Pharma, said, “We are pleased to announce this strategic transaction with Nirma, which will be the new acquisition for Glenmark Life. An important milestone in shaping an independent growth path. Science. This deal will move up the value chain to become an innovative/brand led organization with a continued focus on our core therapeutic areas of dermatology, respiratory and oncology. “This is in line with Glenmark’s strategic intent to grow. It also presents an opportunity for us to strengthen shareholder value through growth and enhancing our overall return profile.”

Later during a press interaction, when asked about the deal with a non-traditional pharma player like Nirma amid interest from private equity investors, Saldanha said: “This is a big play in pharma for the Nirma group. They Have been extremely successful.” In many businesses, and I am sure they will use this platform to expand further. Strategic investors are more long-term, growth oriented and they are much more employee friendly than PE firms. So having a strategic investor take a look at this business makes sense for us.”

He said that as soon as the transaction (which was done at an EV/EBIDTA multiple of around 11x) closes, Glenmark Pharma will be net cash positive.

big nirma axis

With this acquisition, Ahmedabad headquartered Nirma Group, founded by Dr. Karsanbhai Patel, has entered the API segment and expanded its existing presence in pharma including injectables, parenteral and ophthalmic products. The group, which has an annual turnover of over $2.5 billion and is present in industrial chemicals, detergents, soaps, cement and real estate development, has been exploring inorganic stakes in the pharma sector in recent times.

In April, it acquired 100 per cent stake in Bangalore-based contract development manufacturing organization (CDMO) Stericon Pharma Pvt Ltd, which makes sterile contact lens cleaning solutions and eye drops.

Stericon Pharma complements Nirma’s existing healthcare vertical Acculife Healthcare. According to its website, Aculife has expanded into infusions, injectables, medical devices and oral formulations and exports to more than 70 countries.

Speaking on the mega purchase, Hiren Patel, Managing Director, Nirma, said: “Nirma has been actively involved in the pharmaceutical sector since 2006. We are excited about this transaction and strongly believe that it will be a great step forward for our pharmaceutical business. Provides an ideal platform for The next stage of development. Our long-term mission has always revolved around providing high quality health care products at affordable prices. Our recent investments serve as a testament to our unwavering dedication to the pharmaceutical industry.”

Patel said, “The acquisition of Glenmark Life Sciences aligns us with our company’s strategic goals and positions Nirma as one of the top five independent API companies in India. This strategic move allows us to capitalize on indigenous research and development.” It also enables manufacturing, thereby making a significant contribution to the “Make in India” initiative launched by the Government of India.

Nirma Group’s advisory team included Khaitan & Company, DAM Capital, KPMG, BCG and Ashman.

Kotak Investment Banking acted as exclusive financial advisor to Glenmark Pharma and Glenmark Life Sciences, while S&R Associates acted as legal advisor to Glenmark Pharma and Trilegal acted as legal advisor to Glenmark Life Sciences. Did.

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