Nirma acquires stake worth Rs. 5,651cr in Glenmark Life Sciences
What's the story
Glenmark Pharmaceuticals has agreed to sell a 75% stake in its subsidiary, Glenmark Life Sciences, to Nirma for Rs. 5,651 crore.
The deal values Glenmark Life Sciences at Rs. 7,535.4 crore and will leave Glenmark Pharma with a 7.84% stake in the company.
The transaction is subject to regulatory and shareholder approvals, and Nirma will make a mandatory open offer to public shareholders for an additional 17.15% stake at Rs. 631 per share.
What Next?
Glenmark Pharma's FY23 figures
GLS recorded FY23 revenues of Rs. 2,161 crore with a net profit of Rs. 467 crore.
The transaction is pending customary closing conditions, including regulatory and shareholder approvals.
Kotak Investment Banking served as Glenmark Pharma and GLS's exclusive financial advisor, while S&R Associates provided legal advice to Glenmark Pharma, and Trilegal advised GLS, according to a transaction update.
Insights
Glenmark Pharma's balance sheet strengthened by the deal
The transaction will help strengthen Glenmark Pharma's balance sheet by extinguishing debt, making the company net cash positive after the deal's completion.
Yasir Rawjee, Managing Director and CEO of Glenmark Life Sciences said, "We will continue to operate as an independent API (active pharmaceutical ingredient) company under the new ownership of Nirma Limited."
Glenmark Pharma does not expect changes in GLS management post-deal, and both companies have agreed to non-compete and non-solicit arrangements for a specified period.
Details
A look at Glenmark Pharma's stock prices
Following this news, Glenmark Pharma's stock price dropped by more than 6% in early trading on NSE on September 22.
The stock opened at Rs. 805, down from the previous day's close of Rs. 827.70, and declined by 6.36% to reach Rs. 775 on NSE during today's trading session.
As of the time of writing, the stock was trading at Rs. 803.05, down 2.92%.