Torrent Pharma buys Elder's domestic formulation biz for Rs 2004 cr

Ahmedabad-based drugmaker Torrent Pharmaceuticals Ltd has acquired thebranded domestic formulation business ofElder Pharmaceuticals forRs 2004 crore.

Elder’s India business comprises a portfolio of over 30 brands, including leading brands in areas of women’s healthcare, pain management, wound care and nutraceuticals.Elder Pharma has six manufacturing plants - three in Maharashtra, one in Himachal Pradesh and two in Uttarakhand.

Elder Pharma will only be selling the intangibles to Torrent Pharma. Under the proposed transaction, the India Business is being sold as a going concern on a slump sale basis and the transaction will also involve the transfer of employees engaged in sales, marketing and operations of the India Business.

Torrent said it would fund the acquisition through a mix of internal accruals and debt and the deal is likely to be closed by June, 2014.

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The transaction has been approved by the boards of directors of both companies.

Elder, which will use the deal proceeds to pare its debt, will continue to manufacture and supply products at existing facilities for Torrent for three years, Torrent said.

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“Elder’s existing brand equity in the areas of women healthcare and pain management will help Torrentstrengthenits position in the Indian market,” the company said in a statement.

Shares of Elder Pharma rose 7% to Rs 349 on BSE after the company said it has entered into business transfer agreement (BTA) for the sale of domestic formulation business to Torrent Pharmaceuticals for Rs 2,004 crore on slump sale basis.

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Under the proposed transaction, Elder will continue to manufacture and supply the products at its existing manufacturing facilities for Torrent for a period of three years.

Debt-ridden Elder Pharma had announced plans to restructure business to clear debt worth Rs 1,300 crore, accumulated after multiple acquisitions abroad.

European pharma giants Sanofi and US major Novartis were also engaged in discussions with the Elder Pharma management for an acquisition.

Young being the transaction and tax advisor and Khaitan & Co. being the legal advisors.

“The transaction is a strategic fit for Torrent and will strengthen its core prescription-based business. This acquisition strengthens our position in the Women Healthcare, Pain management & Vitamins/Nutrition segments by enhancing & accelerating market access. It is also expected to enable cost & revenue synergies in Torrent’s domestic formulations business” said Sudhir Mehta, Chairman, Torrent Group.