China’s Fosun Group has reportedly settled for a revised offer to acquire 74% of the Indian company Gland Pharma Ltd., for a substantial valuation of USD 1.1 billion. This deal which was on hold for more than a year, had been widely speculated to be blocked by the Indian government.
For the uninitiated, Fosun was initially looking forward to buying an 86% stake valued at USD 1.3 billion from Gland Pharma’s founders and its private equity investor KKR, marking the largest-ever Chinese bid for an Indian company. However, the Cabinet Committee of Economic Affairs (CCEA) had put the deal in the cold storage, owing to the ongoing border stand-off between India and China at Dokalam. Sources revealed that the CCEA is not very likely to clear the final hurdle of the deal without a diplomatic shove from the Chinese end and a favorable sign from the Indian government.
After failing to secure government approval for an 86% stake purchase, Fosun structured an alternative case where the stake of up to 74% would come under the automatic approval route. As per the new regulations announced in June 2016, foreign direct investment (FDI) of up to 74% in existing pharmaceutical firms would fall under the automatic route, while FDIs that involve acquiring more than 74% of stake would need to go through the government approval route. Now, with Fosun trimming down its transaction size, the deal is set to get automatic clearance.
For the record, Gland Pharma, a Hyderabad-based firm develops and manufacture generic injectable chiefly for the U.S. pharmaceutical market as well as for the regional and some semi-regulated markets. It is one of the largest producers of clot busting medicines across the globe. Fosun’s deal with Gland Pharma is likely to strengthen and fast-pace the Chinese company’s global presence. The partnership between the two is also likely to leverage synergies which include the introduction of the bio-similar program developed by Fosun in the Indian market.
Now that the deal no longer requires a nod from India’s CCEA, chaired by Prime Minister Narendra Modi, Fosun & Gland plan to accelerate their approval from the Chinese, United States and Indian regulators. Under the revised deal, Fosun Pharma has considered an approximate spending of no more than USD 25 million for the Indian firm’s Enoxaparin prototype launch in the US.
Meanwhile, both the companies have agreed to extend the deadline to 3 October to complete all the formalities.
Ojaswita Kutepatil develops content for Market Size Forecasters. A mechanical engineer by qualification, worked as a BDE and Technical Engineer before switching her profession to content writing. As an Associate Content writer, where she pens down write-ups pertaining to the market research industry...