India’s Torrent Pharma to acquire controlling stake in JB Chem and Pharma

By Abu Sultan and Mrinmay Dey

(Reuters) -India’s Torrent Pharmaceuticals said on Sunday it will acquire a 46.39% controlling stake in smaller peer JB Chemicals and Pharmaceuticals from New York-based investment firm KKR, and plans to merge the two drugmakers.

The transaction, announced in a joint statement released by the three companies, implies a total equity valuation of 256.89 billion rupees ($3.01 billion) for JB Pharma on a fully diluted basis.

“This strategic alignment furthers our goal of strengthening our presence in the Indian pharma market, and building a larger diversified global presence,” Torrent Executive Chairman Samir Mehta said in the statement.

Under the terms of the deal, Torrent will initially acquire an equity stake in JB Pharma from KKR for 119.17 billion rupees.

Following this, Torrent will launch a mandatory open offer to acquire up to an additional 26% of JB Pharma shares from public shareholders at 1,639.18 rupees per share.

Torrent also signaled its intent to acquire up to 2.80% of equity shares from certain JB Pharma employees, the company said.

The second phase of the transaction involves a merger of Torrent and JB Pharma through a scheme of arrangement. Upon merger, JB Pharma shareholders will receive 51 Torrent shares for every 100 JB Pharma shares held.

KKR also confirmed the deal in a separate statement.

“We are confident that the combined strengths of our organisations will unlock greater opportunities to enhance healthcare access across our markets,” said JB Pharma CEO Nikhil Chopra.

India is Torrent’s biggest market by revenue, where it competes with peers such as Mankind Pharma.

Torrent offers drugs used to treat cancer, infections and diabetes, and has benefited from steady demand for its specialty and chronic illness drugs.

For the January-March quarter, its consolidated net profit was up 11% from a year earlier.

JB Chemicals and Pharmaceuticals, meanwhile, reported higher fourth-quarter profit in May.

Along with the steady market for its gastrointestinal medicines, Metrogyl and Sporlac, the company also benefited from demand for its drugs that treat chronic conditions such as hypertension.

KKR’s sale of its controlling stake in JB Pharma has reaped five times its initial investment in the company on a local currency basis, which translates to a 36% gross internal rate of return, said a person with knowledge of the transaction, who declined to be named as the information was not public.

KKR bought a controlling stake in JB Pharma in 2020 at 745 rupees a share, it said at the time.

The firm declined to comment.

($1 = 85.4400 Indian rupees)

(Reporting by Abu Sultan and Mrinmay Dey in Bengaluru, and Kane Wu in Hong Kong; Editing by Joe Bavier and Muralikumar Anantharaman)