Transaction:
- Glenmark Pharmaceuticals Limited (GPL) has entered into a share purchase agreement with Nirma Limited to divest a 75% stake in Glenmark Lifesciences (GLS) at an EV of Rs 7500 Crores.
- Current Promoter group to be public shareholders.
About Glenmark Pharmaceuticals Ltd.:
- A global research-led pharmaceutical company, Glenmark was established in 1977.
- Glenmark Pharmaceuticals Ltd has presence across generics, Specialty and OTC business with operations in over 80 countries with 14 manufacturing facilities and 4 R&D centers spanning across GPL and GLS.
About Glenmark Life Sciences Ltd.:
- Glenmark Life Sciences (GLS) is a subsidiary of Glenmark Pharmaceuticals Ltd which launched the API business by setting up a manufacturing facility in 2001 to cater to the growth in the API segment across the world.
- In 2019, the API manufacturing business of Glenmark was spun off into GLS, which will act as an independent company and focus on API business.
About Nirma Ltd.:
- Established in 1980 by Dr. Karsanbhai Patel, Nirma manufactures detergents, expanded its operations to soaps, chemicals and processing of minerals. It has plants in Searles Valley, USA, and Mehsana, Ahmedabad, Vadodara and Bhavnagar in Gujarat.
- The largest soda ash manufacturer in India, Nirma acquired the California-based natural soda ash producer, Searles Valley Minerals Inc., in fiscal 2008, having manufacturing facilities in Argus, Trona and Westend in USA.
- In fiscal 2022, on a standalone basis operating income stands at Rs 6480 Crore with a profit after tax (PAT) of Rs 546 Crore compared to Rs 5073 Crore and Rs 532 respectively in the previous fiscal.
Rationale:
- Acquisition of GLS follows Nirma’s earlier acquisition of Stericon Pharma, a CDMO firm from PE firm InvAscent in March 2023.
- Nirma earlier brought Emami’s cement business for around Rs 5500 Crore in 22020 and Lafenge India for around 900 Crore in 2016.
- Glen Life will continue to operate API Business under new ownership.
- Glen Life science had been put for sale for a while and PE Funds like ChrysCapital, Blackstone and Sekhmet had shown interest in the company.
- Nirma bought the shares of Glen life at Rs 615 per share, at slightly lower than its last trading price. Nirma would be doing the mandatory open offer at Rs 631 per share.
- Transaction was done at around 11 times EBITDA and 15.26 times P/E.
- GPL will retire outstanding debt of Rs 4340 Crores.
- GPL has agreed to buy API from GLS for a period of five years and hold its share for at least 1 year.
Acknowledgements:
RBI Bulletin (www.bulletin.rbi.org.in), SEBI (www.sebi.gov.in), NSE (www.nseindia.com), BSE (www.bseindia.com)
Disclaimer:
This material has been prepared by the personnel in Vora Corporate Finance which is Investment Banking arm of Vora Management Consultancy Private Limited and looks after Mergers & Acquisitions (M&A), Private Equity (PE), Fund Raising, Debt syndication and Valuations and is based out of Ahmedabad, Gujarat, India. Any views or opinions expressed herein are solely that of individual authors and may differ from view of Vora Management Consultancy Private Limited. This material is proprietary to Vora Management Consultancy Private Limited and is for your personal use only. Any distribution, copy, reprints or forward to others is strictly prohibited.
This material captures the information based on information available in the public domain, public announcements and sources believed to be reliable. Analysis contained herein is based on publicly available information and appropriate assumptions. This material is intended merely to highlight market developments and is not intended to be comprehensive and does not constitute strategic, investment, legal or tax advice. In no event Vora Management Consultancy Private Limited be liable for any use by any party or for any decision made or action taken by any party in reliance upon, or for any inaccuracies or errors in, or omissions from, the information contained herein and such information may not be relied upon by you for evaluating any transaction.
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