Mumbai-based Cipla Ltd is acquiring Cipla Medpro South Africa Ltd, the company’s distribution partner in South Africa, for around $512 million, in one of the largest overseas acquisitions in the pharma space. YK Hamied-promoted Cipla is buying 100 per cent shares at ZAR 10 a unit and then the Johannesburg-listed drug firm will be delisted.
This is a revised offer as last November, the Indian company was planning to buy 51 per cent in Cipla Medpro at ZAR 8.55 a share. But the deal was reportedly facing roadblocks over valuation differences.
Cipla Medpro offers a broad range of medicines and products, targeting a number of critical care areas such as cardiovascular and respiratory, diabetes, oncology, psychiatry, anti-malarials and HIV/AIDS.
The group’s operations include two divisions. One is Cape Town-based Cipla Medpro which is into an extensive range of chronic care medicines and OTC products. The other is Cipla Medpro Manufacturing, one of the first international PIC/S-compliant pharmaceutical manufacturing facilities. This Durban-based unit manufactures select lines of the group’s products and also offers contract manufacturing solutions to local and multinational companies.
The group is currently the third largest pharma company in South Africa. More than three-fourth of its business is derived from the single exit price (SEP) segment and includes scheduled products for both private and tender business while the OTC segment and other products generate the rest of the revenues.
A deal will provide better control for Cipla over its distribution in the fast-growing emerging markets of the African continent besides boosting its own product range.
Besides its strong presence in the home market, Cipla Medpro also has products registered for markets like Botswana and Namibia.
For Cipla, this will be the first acquisition in three years. In 2010, it acquired stake in three companies – Meditab Specialities Pvt Ltd, Mab Pharm and a drug formulation facility in Sikkim.
Shares of Cipla Ltd were trading at Rs 367 a unit, up 0.75 per cent at 11.16 am in a strong Mumbai market on Thursday.
Morgan Stanley South Africa (Pty) Ltd and Webber Wentzel acted as the financial advisor and the legal advisor to Cipla, respectively. Norton Rose South Africa was the legal advisor to Medpro.
(Edited by Sanghamitra Mandal)