China's Shanghai Fosun Pharmaceuticals (Group) Co. Ltd is poised to acquire KKR-backed Indian drugmaker Gland Pharma Ltd for $1.4 billion and an announcement is likely to be made this week, a Business Standard report said on Thursday citing sources it didn't identify.
This is higher than the previously reported valuation of $1.27 billion. If the deal goes through, it will be Shanghai Fosun’s first investment in the Indian pharmaceutical industry.
Fosun had said in May that it made a non-binding offer to acquire 96% of Gland Pharma from private equity giant KKR & Co and the company's founders to enhance its drug manufacturing, research and development capacity.
On Thursday, The Economic Times reported that the Chinese firm is acquiring 86% of the company and that the founders will retain a 10% stake. A Hong Kong exchange announcement by the group is likely on Thursday, the report said.
In an email response to VCCircle, KKR India head Sanjay Nayar and Gland Pharma managing director Ravi Penmetsa declined to comment.
If the deal goes through, this would be KKR’s second major exit this year after it sold Alliance Tires to Japan's Yokohama Rubber for $1.2 billion in March.
KKR had invested $200 million in Gland Pharma for a 33% stake in the company in 2013, acquiring the stake from healthcare-focussed fund Evolvence India Life Sciences fund.
Other companies interested in Gland Pharma included US-based Baxter and private equity firm Advent International, although they dropped out of the race a little after Fosun indicated its interest.
Gland Pharma’s net sales rose to Rs 993.8 crore for the financial year through March 2015 from Rs 990.9 crore the year before, but its net profit dropped to Rs 209.2 crore in 2014-15 from Rs 223.8 crore, according to VCCEdge, the data research platform of VCCircle.
The company was founded in 1978 in Hyderabad by PVN Raju. It makes a wide range of injectables including its flagship drug molecule ‘low molecular weight herapin’, which is a type of a blood thinner.
Fosun has been looking to invest in India for a while. In June 2013, VCCircle reported that the conglomerate was looking at making private equity investments in Indian companies. The company had held talks with Sula Vineyards and SpiceJet. The company had plans to invest at least $30 million in growth companies in India.
Founded in 1992, the Fosun group has diverse investments in pharmaceuticals, property development, steel, mining, retail and financial services sectors.
Last week, its investment platform Fosun International acquired the English soccer club Wolverhampton Wanderers for $59 million, according to media report. The firm also owns a majority stake in Canadian entertainment company Cirque du Soileil and waged a lengthy takeover battle to acquire French travel company Club Mediterranee in 2015 for $939 million.
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