Torrent Pharma set to finalise JB Chemicals buyout in 15-18 months
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Ahmedabad-based drug maker Torrent Pharmaceuticals will complete its acquisition of JB Chemicals & Pharmaceuticals in the next 15-18 months subject to key regulatory approvals, a top company executive said in an investor call on Monday.'CCI ( Competition Commission of India ) approval will take 4-5 months and is expected by mid-December. Then there will be a one-month process to complete the minimum tender offer and consummate the transaction. Then the merger process starts that will take about 12 months,' said Sudhir Menon, CFO and executive director – finance, Torrent Pharma.The acquisition will be mainly debt funded, he said. 'The leverage required for the transaction is looking quite comfortable from a servicing point of view,' said Menon. 'However, we will see if equity mix is required at all.' Torrent is looking at a cost of borrowing of less than 8%.It plans to repay its debt within two and a half years of taking control of JB Chemicals.'If FY27 I am between 1.8x to 2.8x (net debt/EBITDA), let's take a mid-number of 2.5, then I should be able to repay the debt in maybe 2.5 years' time. It's quite comfortable for me,' said Menon.He also added there is no immediate need to tap its approved QIP route.The company will acquire 46.39% equity stake (on a fully diluted basis) of JB Pharma through a share purchase agreement for Rs 11,917 crores at Rs 1,600 per share.This will trigger a mandatory open offer to acquire up to 26% of JB Pharma shares from public shareholders at an open offer price of Rs 1,639.18 per share, according to an investor presentation from Torrent.Torrent has also expressed its intent to acquire up to 2.80% of equity shares from employees of JB Chemicals at transaction price.JB Chemicals shareholders will get 51 equity shares of Torrent for every 100 equity shares of JB Chemicals. Aman Mehta , whole time director, Torrent Pharma, said the acquisition is aligned to the company's strategic vision of deepening its presence in the Indian pharmaceutical market 'It expands our presence in some high growth segments and gives us a resilient platform to drive long-term growth,' he told analysts on Monday.'Additionally, it provides us with a new avenue of growth in the CDMO segment . We find this space to be attractive, and JB has a strong right to win with a successful track record in this space,' he added.Mehta said the US, Russia and South Africa markets will be of particular interest in the CDMO space. 'They are the most important regions outside India in the CDMO segment where we intend to have a greater presence through the acquisition,' he added.In the India business, JB Chemical's strong capability in areas such as cardiac and gastroenterology will be complementary therapies to Torrent, while the deal also opens new therapy segments for Torrent in areas such as ophthalmology, IVF and nephrology.'The enhanced prescription footprint is positive for our overall reach and will help enhance trade visibility,' said Mehta.As far as impact on leadership and people post the merger, Menon said a proper retention plan will be put in place for key people. 'I believe continuity will exist,' he said.
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