The transaction will include buying out KKR from its 5 year old investment. In July 2020, KKR acquired around 54 percent of JB Pharma from its promoters and founders, the Mody family, for approximately Rs 3,100 crore translating to Rs 745 per share. It will also trigger an open offer for an additional 26% of the company. If fully successful, Torrent could end up owning 73.84 per cent of the company.
At current price, that could lead to a Rs 20,734.61 crore buyout for Torrent – its largest so far. Acquisition of KKR’s stake alone would translate to a Rs 13,433.69 crore transaction.
A formal announcement is expected in coming weeks, one of the sources mentioned above added.
JB Chemicals closed Friday at Rs 1799.35/share, up 3% from the previous day’s closing. Its current market value is Rs 28,080.46 crore. The JB Chemical stock had touched a 52-week high on 16th August 2024, and has dropped 4.58% year to date.
JB Pharma has been a turnaround story backed by a string of deals and a push to some of its own brands like Nicardia (hypertension), Rantac (antiulcer), Cilacar and Metrogyl (antibacterial). For Torrent, these hit brands will come handy in the hyper competitive branded generic market in India, more so because these products have a strong reputation with the doctors. Of the total sales of roughly Rs 3900 crore, JB leading eight brands account for half. Additionally, Torrent will make an entry into the CDMO business via JB Pharma’s high quality alliances with multinational companies for cough lozenges.Torrent, Alkem and EQT were in separate negotiations with KKR last year, when the US buyout fund had launched a formal sale process but that failed due to valuation mismatch. The talks are believed to have resumed bilaterally in recent weeks.KKR declined to comment. Mails sent to Torrent Pharma did not generate a response till press time.
Ahmedabad headquartered Torrent is also holding financing negotiations with HSBC, Standard Chartered Bnak and Barclays to arrange $1.6 billion rupee financing. The three were the financing banks last year as well, so they have sought “refreshed approvals on the bond structure.” The INR bond facility is being raised to fund the equity requirement for the transaction and is likely to be backed by promoter group entities or select downstream cash flows,” one of the people said.
Mails to HSBC remained unanswered as of press time Friday, while Standard Chartered and Barclays spokesperson declined to comment.
Moneycontrol was the 1st to report that Torrent has revived its JB Chemicals buyout plans on Friday evening.
Earlier this March, KKR sold a little above 5% stake in the open market via a block deal and raised Rs 1459 crore. “Unlike Max Healthcare, where KKR sold significant chunks of the company, in JB Chemicals selling close to 50% would have been difficult. Torrent has always been keen but last time there was a difference in price expectations and the stock had significantly run up,” said an industry executive on condition of anonymity.
In 2023, Torrent was aggressively pursuing a $7 billion buyout of Cipla that got aborted following differences within the promoter family. It also made a billion dollar play to take over Biogaran, France’s largest generics company, from Servier last year, before the French government intervened to block the divestment.
Torrent’s current market capitalisation is Rs 1,13,184.61 crore with the promoters, the Mehta family, owning 68.21% of the company.
TURNAROUND STORY
Under CEO Nikhil Chopra, who was brought in by KKR from Cipla, JB Pharma has seen a significant ramp up in its sales and profitability. For the financial year 2024-25, JB Pharma recorded a revenue of Rs 3,918 crore compared to Rs 3,484 crore in FY23-24, registering 12 percent growth.
JB Pharma has also aligned with Novartis to sell its new generation cardiovascular drug Izirize (inclisiran), demonstrating its deeper and innovative drugs presence in the cardiology market.
In a recent interview with ET, Torrent Pharma MD designate Aman Mehta told ET recently that he is aiming to be in the top three slot in the Indian market in three to five years. “As far as the India market is concerned, we have reached the position today through mainly inorganic growth over the last decade.”
He added “Our rank was much lower 10 years ago than it is today. That’s certainly a big positive that has happened in the sense that from where we were to where we are, we are in a much stronger position to invest further and even grow the business from here.”
While hinting at big buyouts, Mehta said, “I would say that from here onwards, acquisitions will continue to remain a priority. And the top three in the Indian market is something that we have our eyes on. Organically it may be difficult to achieve in the near term. But certainly through inorganic growth it seems quite possible, and may be in the next couple of years, if something materializes, that certainly is going to be part of our ambition.”
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