ChrysCapital chief Ashish Dhawan-backed pharma company JB Chemicals & Pharmaceuticals has sold its Russia/CIS over-the-counter products business to Cilag GmbH International, an arm of the global healthcare giant Johnson & Johnson, for $260 million (Rs 1,170 crore) in cash. The sale includes cough syrup brands Doktor Mom and Rinza.
Johnson & Johnson LLC and its affiliates will market these products in Russia, the world’s eighth largest OTC market, and in the Commonwealth of Independent States (CIS), as well as in other countries.
The deal involves Rs 938.51 crore, besides worldwide rights and registrations for the three brands – Rinza, Doktor Mom and Fitovit – for Rs 6.06 crore, and inventory and receivables worth $47 million. The deal also involves transfer of employees to the acquirer.
JB Mody, chairman of JB Chemicals said, “The divestment will provide JB Chemicals & Pharmaceuticals Ltd with the financial flexibility to pursue new growth opportunities in India and other focus markets.”
The Indian firm has also signed a long-term agreement to supply Cilag with finished products for the acquired Russia/CIS OTC business.
Over two-thirds of JB Chemicals consolidated revenues of Rs 872 crore in FY2011 came from international market sales and the bulk of this was from the Russia/CIS markets. In fact, Doktor Mom is reportedly a brand worth Rs 200 crore. Sale of this business can almost halve JB Chemicals’ consolidated annual sales.
JB Chemicals scrip dropped 7 per cent by mid-day trading on Tuesday to Rs 134.45, valuing the firm at Rs 1,136 crore. Ashish Dhawan owns 6.92 per cent in the company in his personal capacity.
“Emerging markets continue to be an important growth opportunity for Johnson & Johnson,” said Jesse Wu, worldwide chairman, Johnson & Johnson Group of Consumer Companies. “This acquisition of strong brands in Russia will allow us to expand our OTC offerings in these growth markets and support our emerging markets strategy.”
The transaction is anticipated to close by mid-2011, subject to customary closing conditions.
Bank of America Merrill Lynch acted as the financial advisor to JB Chemicals & Pharmaceuticals for the transaction.