Ahmedabad-based Torrent Pharmaceuticals has sought fair trade regulator CCI's clearance to acquire a majority stake in in J B Chemicals and Pharmaceuticals in a ₹19,500-crore deal.
After the completion of the deal, Torrent Pharmaceuticals will become India's second most valued pharma company.
The development came after Torrent Pharmaceuticals in June this year announced the acquisition of a majority stake in J B Chemicals and Pharmaceuticals in a ₹19,500-crore deal.
"The proposed combination relates to acquisition of shareholding by the acquirer (Torrent Pharmaceuticals Ltd) in the target (J B Chemicals & Pharmaceuticals Ltd) and the subsequent amalgamation of the target with the acquirer," according to a notice filed with the Competition Commission of India (CCI).
Torrent Pharmaceuticals is the flagship company of the Torrent group and is engaged in the business of manufacturing and sale of pharmaceutical formulations (FDFs) across therapeutic segments.
J B Chemicals & Pharmaceuticals is engaged in business of manufacturing and marketing of diverse range of FDFs and APIs (Active Pharmaceutical Ingredients) and also provides CDMO (Contract Development and Manufacturing Organisation) services as well.
The parties (Torrent Pharma and J B Chemicals) said that their activities exhibit horizontal overlaps in certain relevant markets for the manufacturing and sale of FDFs in India.
In June, Torrent said it will acquire 46.39% stake from promoters Tau Investment Holdings Pte Ltd, an affiliate of global investment firm KKR, for about ₹11,917 crore. It would additionally buy another 2.80 per cent from certain employees of JB Chemicals at the same acquisition price of ₹1,600 per share (totaling ₹719 crore).
Post this, it would make an open offer for buying 26% from open market, as per listing norms, at a price of ₹1,639.18 per share (totaling ₹6,842.8 crore).
This will be the second biggest deal in the pharma sector ever, behind Sun Pharmaceutical Industries' 2015 acquisition of Ranbaxy Laboratories. Post share purchase, JB Pharma will merge into Torrent.
In 2020, KKR had bought a 65 per cent stake in JB Chemicals & Pharmaceuticals. In March this year, KKR divested a 5.8 per cent stake in JB Pharma for ₹1,460 crore through open market transactions.
Established in 1976, JB Pharma produces a range of pharmaceuticals in areas such as gastroenterology, dermatology and diabetes, etc.
Torrent Pharma, with annual revenues of more than ₹11,500 crore, is the flagship company of the Torrent Group, with group revenues of ₹45,000 crore.
In April 2014, Sun Pharma had announced it would acquire troubled rival Ranbaxy in an all-stock transaction worth USD 4 billion that includes USD 800 million debt. The merger was 'consummated' following receipt of requisite approvals a year later in March 2015.
In another big deal, Mankind Pharma last year completed the transaction to acquire Bharat Serums and Vaccines for a consideration of ₹13,768 crore.
