JB Chemicals & Pharmaceuticals has called off a proposed deal to sell its Russia-CIS prescription products business to Dr Reddy’s Laboratories for Rs 137.5 crore ($30.5 million). The companies did not disclose why they were not going ahead with the previously announced transaction, but stated, “The proposed deal has been mutually called off.”
Consequently, the Russian subsidiaries of JB Chemicals and Dr Reddy’s have also called off their proposed deal for the sale of prescription products’ inventory as a part of the sale of the division. This simultaneous deal was worth $3.9 million.
JB Chemicals scrip crashed almost 6 per cent after the announcement to close at Rs 70.85 a share on the BSE. Dr Reddy’s Labs’ scrip was down 0.16 per cent and closed at Rs 1,483.15 per unit in a weak Mumbai market on Monday.
Earlier this year, JB Chemicals had sold its over-the-counter products business in Russia-CIS to Cilag GmbH International, an arm of the global healthcare giant Johnson & Johnson, for $260 million (Rs 1,170 crore) in cash. The sale included cough syrup brands Doktor Mom and Rinza.
Commenting on the deal with Dr Reddy’s, JB Mody, chairman of JB Chemicals, had said in July, “The decision to sell the remaining Russia-CIS business has been taken in overall interest of the company and the sale proceeds will help it pursue growth opportunities in domestic formulations, rest-of-the-world exports and contract manufacturing business.”
Bank of America Merrill Lynch had acted as the financial advisor to JB Chemicals & Pharmaceuticals for both the transactions. Incidentally, Dr Reddy’s was also reported to be in the race to acquire the firm’s OTC products business, which was finally snapped by Johnson & Johnson.
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.
ChrysCapital chief Ashish Dhawan, who is an active investor in the capital market in his personal capacity, had raised his holding in JB Chemicals from 6.92 per cent to 8.03 per cent as of June 30, 2011.