Mumbai-based drugmaker Cipla Ltd has agreed to acquire 51 per cent equity stake in Uganda-based Quality Chemicals Ltd (QCL) for $30 million (around Rs 191 crore) in tranches from its existing shareholders, it said on Friday.
The deal, which is expected to be completed by the end of July this year, is routed through a wholly owned subsidiary Cipla (EU) Ltd, UK.
As per the definitive agreement signed by the two companies, Cipla will make an upfront payment of $8 million on completion and five equal instalments of $4.41 million payable at annual intervals thereafter.
Incorporated in 1997, QCL imports and distributes pharmaceutical and consumer products. For the financial years 2012, 2013 and 2014, the turnover of QCL was UGX15.76 billion ($5.28 million), UGX17.02 billion ($5.71 million) and UGX14.85 billion ($4.98 million), respectively.
QCL also owns a 22.05 per cent equity stake in Cipla's subsidiary in Uganda, called Cipla Quality Chemical Industries (CQCIL). Following the acquisition of QCL, Cipla's effective holding in CQCIL will rise to 62.3 per cent from existing 51.05 per cent.
“The transaction has been done at around 12x market cap/sales, which is on the higher side, though given the balance sheet of the company can be easily funded,” said Sarabjit Kour Nangra, vice president (research) – pharma at Angel Broking.
Last month, Cipla had also inked a deal to acquire Duomed Produtos Farmaceuticos Ltd, a two-year-old importer and distributor of pharma products in Brazil, for R$ 1.29 million (Rs 2.6 crore or $418,000), as part of its front-end strategy and to expedite its product registrations in Brazil.
Earlier this year, Cipla entered into a joint venture agreement with two of its existing business partners in Morocco—Societe Marocaine De Cooperation Pharmaceutique (Cooper Pharma) and The Pharmaceutical Institute (PHI). It is expected to invest $15 million in this venture.
A few months ago, it said it is acquiring 51 per cent stake in a UAE-based pharma company. Earlier the company acquired 60 per cent stake in a Sri Lankan firm for $14 million.
The drugmaker has also acquired firms in India. A few weeks ago, it bought 60 per cent stake of Mumbai-based Jay Precision Pharmaceuticals Pvt Ltd (Jay Precision) for Rs 96 crore ($15.4 million). Jay Precision is a supplier of respiratory devices to Cipla and has a manufacturing facility at Vasai, Maharashtra.