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Cipla is in Advanced Talks with Companies to Sell 60% Stake

Written by : Nikita Saha

September 29, 2023

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Based on the Bernstein analysts' estimates, the deal for approximately 60% of India's third-largest drugmaker could be valued at up to $7 billion, potentially making it India's largest pharmaceutical deal to date.

Following a series of collaborative efforts and funding preparation to acquire Cipla, the country's third-largest drugmaker has finally come to the field. It's now in discussion with two consortiums to sell a controlling 60% stake.

The two consortiums include-one led by Torrent Pharmaceuticals Ltd, and the other a group of buyout firms led by BPEA EQT and General Atlantic.

Reportedly, the consortium led by Torrent Pharma is backed by its promoters, the Mehta family. The consortium also includes investments from entities linked to Dilip Shanghvi-led Sun Pharmaceutical Industries Ltd. and the Patel family-owned Zydus Lifesciences Ltd.

Based on the Bernstein analysts' estimates, the deal for approximately 60% of shares of India's third-largest drugmaker, Cipla, could be valued at up to $7 billion, potentially making it India's largest pharmaceutical deal to date.

Just a few days back, we reported that the Ahmedabad-based Torrent pharmaceutical was in advanced negotiations with Luxembourg's CVC Capital Partners to raise investment estimated around $1.2-1.5 billion for the acquisition of Cipla.

Further, the pharma company was also engaged in a discussion with Bain Capital. Additionally, foreign banks, including Morgan Stanley and Barclays, were also in talks with Torrent to extend loans and arrange financing for the deal..

Later, Torrent was in talks with Apollo Global Management to borrow up to $1 billion for Cipla Bid.

Moreover, Cipla's founding family is eager to divest their 33.4% stake, which would, in turn, trigger an open offer for an additional 26%, in accordance with the Indian regulations.

Cipla, with a market capitalisation of approximately $12 billion, faces competition from global giants including Pfizer and Abbott among others, in India where the pharmaceutical market is expected to be worth $130 billion by 2030 from $50 billion currently.

On the other hand, Torrent, with a market capitalisation 56% lower than Cipla's, specialises in medications related to diabetes, pain management, and oncology. It has a presence in over 40 countries.

Founded in 1980, General Atlantic is a leading player among the USA's growth equity firms. The company aims to help its portfolio companies achieve success. They have a global team dedicated to helping their portfolio companies become market leaders domestically, regionally, and globally. The company saw significant growth in its annual revenue for the year 2022 securing approximately $1 billion while it secured $218.9 million in 2021.

While Torrent Pharma seems to be the most well-placed candidate for this acquisition, it will be interesting to see how further the deal goes.


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