Bangalore-based Strides Arcolab Ltd has sold its entire 94 per cent holding in Ascent Pharma Health Ltd, its subsidiary operating in Australia and South-east Asia, to NYSE-listed Watson Pharmaceuticals, Inc., at an enterprise value of AU$375 million ($393 million).
Ascent is one of the top five generic pharmaceutical companies in Australia with presence across several South-east Asian countries like Singapore where it is the leading generic pharmaceutical company.
As part of the transaction, Watson also acquired the remaining 6 per cent shareholding associated with Dennis Bastas, CEO of Ascent. The transaction was signed and closed simultaneously.
Ascent contributed around one third to consolidated group revenues of $482 million and around a fifth of the consolidated EBITDA of $100 million in 2011.
Strides had been raising its holding in Ascent over the past four years, eventually acquiring a majority stake in the firm. It had raised its holding to 94 per cent around a year ago and delisted Ascent from the Australian stock exchange by picking an additional 34 per cent stake for around $40 million, valuing the company at around $120 million, according to VCCedge, the financial research platform of VCCircle.
Although the outstanding debt component of Ascent could not be immediately ascertained, it is likely that Strides Arcolab made a neat profit from the investment. Ascent was one among a string of overseas acquisitions, made by Strides as a part of its international expansion.
Jefferies International Ltd acted as sole financial advisor to Strides Arcolab. Middletons, Herbert Smith LLP and DSK Legal acted as legal counsel.
Commenting on the transaction, Arun Kumar, executive vice-chairman and group CEO of Strides Arcolab, said, “The sale of Ascent is a value-enhancing and forward-looking initiative for Strides. We have been clear about our intention to focus on our highly attractive steriles segment, which we expect to be our growth engine, going forward. The transaction further facilitates the execution of this strategy and unlocks significant value for the group. Furthermore, the proceeds from the transaction considerably strengthen our balance sheet.”
Bulk of the money raised from the transaction will be used to pay down $250 million debt, of which $120 million will be used for redemption of the convertible bond due in June-2012. Rest of the money will be used as growth capital for Agila, the steriles business of Strides Arcolab.
Strides Acrolab scrip shot up 17.42 per cent to hit a new high of Rs 478.3 a share at BSE on Tuesday in a strong Mumbai market. At this price the company has a market cap of Rs 2,787 crore.
Paul Bisaro, president and CEO of Watson, said, “The acquisition of Ascent provides Watson with a successful commercial structure in both Australia and South-east Asia, and a broader pipeline of products to support continued growth. We are excited to welcome the Ascent employees in Australia and South-east Asia to our growing global team and anticipate a seamless and rapid integration of the Ascent businesses.”
Watson is an integrated global specialty pharmaceutical company engaged in the development, manufacturing, marketing and distribution of generic pharmaceuticals and specialised branded pharmaceutical products focused on urology and women’s health.