Strides Arcolab Ltd has inked a deal to buy South African drugmaker Aspen Pharmacare's generic pharmaceutical business in Australia together with certain branded pharma assets for A$380 ($300 million or around Rs 1,900 crore), it said on Thursday.
This is the sixth-largest overseas acquisition in the pharma sector by an Indian company to date, according to VCCEdge, the data research platform of VCCircle.
The acquisition will make Strides one of the top three generic pharmaceutical suppliers in Australia and among the top 10 pharmaceutical companies in the country.
The business, which will operate under the Arrow Pharmaceuticals brand, will sell approximately 140 generic prescription drugs and an extensive range of non-prescription pharmacy products.
Strides had virtually exited Australian market three years ago when it sold its entire 94 per cent holding in Ascent Pharma Health Ltd, its subsidiary operating in Australia and Southeast Asia, to NYSE-listed Watson Pharmaceuticals, Inc., at an enterprise value of AU$375 million ($393 million). Watson later acquired Actavis and renamed itself as Actavis.
Ascent was one of the top five generic pharmaceutical companies in Australia with presence across several Southeast Asian countries. As part of that transaction, Watson also acquired the remaining 6 per cent stake held by Dennis Bastas, founder and CEO of Ascent.
Strides has roped in Bastas as CEO of Arrow Pharmaceuticals.
“The Australian generic pharmaceutical market has always been very successful for Strides. The Aspen Australian generic pharmaceutical asset is a unique platform for Strides to re-build its business in Australia. Strong local management, a market leading product portfolio supported by our in-house cost effective manufacturing, will be the key ingredients of our strategy for Australia,” said Arun Kumar, founder and group CEO of Strides Arcolab.
The business being acquired had sales of approximately A$120 million in the last financial year ended June 30, 2014 with an EBITDA margin of approximately 31 per cent.
The acquisition of the business will include access to the product pipeline that was under development by Aspen and includes a number of major product launches in the next six months, Strides said.
The transactions will be financed by a combination of internal accruals and debt. Strides said it will be EPS accretive immediately and the transaction is expected to close by September 30.
For Strides Arcolab, this is the first significant overseas acquisition activity in five years. Notably, the previous big overseas buy was also from Johannesburg Stock Exchange-listed Aspen Pharma where it acquired a Brazilian unit for $75 million.
It has also acquired Aspen's 50 per cent stake in its equal equity JV Onco Therapies in 2010. In 2007, Aspen had acquired 50 per cent stake in Strides' Uruguay-based arm, as per VCCEdge.
Last year, Strides struck three deals including two in India. It made a strategic investment in Oncobiologics Inc and also bought majority stake in branded generics business of Chennai-based Bafna Pharmaceutical and announced an all-stock deal to buy Shasun Pharma.
Strides' scrip rocketed 8.26 per cent to close at Rs 1,184.55 a share on the BSE in a flat Mumbai market on Thursday.