Glenmark Pharmaceuticals Ltd said Thursday it has agreed to sell a 75% stake in its subsidiary Glenmark Life Sciences Ltd to Nirma Ltd for Rs 5,651.5 crore (about $680 million).
Glenmark Pharma will own 7.84% in Glenmark Life after the divestment, according to a stock-exchange filing. Nirma will make a mandatory open offer to buy a stake of up to 17.33% in Glenmark Life from the company's public shareholders.
Nirma is buying Glenmark Life shares at a price of Rs 615 per share. Share of Glenmark Life closed at Rs 627.10 apiece on the BSE on Thursday. The deal implies an equity valuation of Rs 7,535.4 crore for Glenmark Life, a tad lower than its market capitalisation of Rs 7,683.68 crore based on its closing share price Thursday. Nirma made the public offer at Rs 631.20 apiece.
For Nirma, best known for its detergent, the deal expands its business into a growing industry. To be sure, this isn't the first time Nirma has stitched a big-ticket acquisition. Previously, it bought Emami Group's cement business in 2020 for an enterprise value of Rs 5,500 crore (about $770 million then) and Lafarge India from LafargeHolcim Ltd for $1.4 billion (Rs 9,400 crore) in 2016.
"This deal aligns with Glenmark’s strategic intent of moving up the value chain to become an innovative/brand-led organization, with continuous focus on our core therapeutic areas of dermatology, respiratory and oncology,” said Glenn Saldanha, Chairman and Managing Director, Glenmark Pharmaceuticals.
Yasir Rawjee, Managing Director and CEO, Glenmark Life, said the company will continue to operate as an independent active pharmaceuticals ingredients (API) company under the new ownership. "I see this as an opportunity to further strengthen our position in the API industry and continue the growth trajectory.”
Glenmark Pharma said it will continue to focus on consistent growth across its key markets while having a strong emphasis on return ratios with net cash positive balance sheet.
The transaction is subject to customary conditions precedent, including receipt of regulatory and shareholder approvals.
Kotak Investment Banking acted as the exclusive financial advisor to Glenmark Pharma and Glenmark Life on this transaction. S&R Associates acted as legal advisor to Glenmark Pharma and Trilegal acted as legal advisor to Glenmark Life.