Private equity firm Carlyle has agreed to acquire a 20% stake in the pharmaceutical business of Piramal Enterprises Ltd for about $490 million (Rs 3,700 crore) in its fourth—and biggest—healthcare deal in India.
The transaction values Piramal Pharma Ltd at $2.775 billion, with a potential upside of $390 million depending on the company’s performance during 2020-21, Piramal Enterprises said in a statement.
The billionaire Ajay Piramal-led group said the final amount of equity investment will depend on the net debt, exchange rate and performance against the pre-agreed conditions when the deal closes.
“This infusion of funds will further strengthen our balance sheet and provide us with a war chest for the next phase of our strategy,” said Ajay Piramal, chairman at Piramal Enterprises.
Piramal Pharma will include Piramal Pharma Solutions, a contract development and manufacturing business, and Piramal Critical Care, a hospital generic drugs business. It will also include the consumer products division, which sells over-the-counter products, and Piramal Enterprises’s stake in a joint venture with Allergan India.
This is the second major asset sale by Piramal this year, as it looks to cut debt and strengthen its balance sheet. In January, Piramal sold healthcare analytics unit Decision Resources Group to US-based Clarivate Analytics Plc for $950 million.
For Carlyle, this is its second pharmaceutical deal in India in as many months. In May, Carlyle agreed to take over animal healthcare company Sequent Scientific Ltd for about $210 million in its biggest control-oriented deal in India.
Carlyle had previously invested in two healthcare companies in India—diagnostics chain Metropolis Healthcare Ltd and hospital company Medanta. (For more on Carlyle’s India strategy, click here.)
Neeraj Bharadwaj, managing director of the Carlyle Asia Partners team, said the private equity firm will help expand Piramal Pharma and facilitate cross-border access.
“Piramal Pharma has built a strong, diversified pharmaceutical business with a solid market position and scale in each of its core business segments of Pharma Solutions, Critical Care and Consumer Products,” he said.
“Given global pharmaceutical industry trends, we see attractive opportunities for organic as well as inorganic growth in each of these businesses,” Bharadwaj added.
The transaction is likely to be completed in 2020, subject to customary closing conditions and regulatory approvals.
Rothschild & Co served as the financial adviser, and Cyril Amarchand Mangaldas and Covington & Burling LLP served as legal advisers to Piramal Enterprises on this transaction.
JPMorgan served as the financial adviser while AZB & Partners and White & Case served as legal advisers to Carlyle.