China’s Fosun Group has revised its offer to acquire a majority stake in Hyderabad-based Gland Pharma Ltd in a bid to bypass the need to secure the Indian government’s approval for the deal.
Fosun has now agreed to acquire 74% of Gland Pharma for $1.09 billion (Rs 6,980 crore), the Chinese conglomerate said in a statement on Sunday evening.
Fosun was initially looking to buy as much as a 96% stake in Gland Pharma from the company’s founders and private equity investor KKR. However, in the deal announced in July 2016 it had trimmed the stake to 86% without specifying any reason.
The deal had run into regulatory hurdles. The Indian government’s Cabinet Committee of Economic Affairs was reluctant to approve Fosun’s plan to acquire 86% of Gland Pharma in light of a border stand-off between India and China, as VCCircle first reported on July 22.
A 74% stake would not require CCEA approval; in July 2016, the Indian government had said that foreign direct investment of up to 74% in existing pharmaceuticals companies would fall under the automatic route.
Fosun also said that the revised deal value includes a contingent consideration of not more than $25 million in relation to the launch of Enoxaparin in the US by Gland Pharma.
Besides, the founders of Gland Pharma have the right to exercise a put option within a year of the agreement closure to sell an additional stake to Fosun for $355 million, the Chinese company said.
The two companies have agreed to extend the deadline to complete all formalities to 3 October.