Piramal sells DRG business to Clarivate Analytics for $950 mn; will use money to reduce debt, explore growth opportunities
The transaction is expected to be completed by the end of February 2020, Piramal Enterprises Limited said in a statement.
PEL DRG Dutch HoldCo BV, a 100 percent subsidiary of PEL and the holding company for DRG, has signed a definitive agreement for sale of DRG to Clarivate Analytics
PEL had initially invested $650 million in 2012 to acquire DRG, out of which $260 million was infused as equity
With this acquisition, Clarivate will be well-positioned in the $19 billion life sciences analytics market
New Delhi: Ajay Piramal-led Piramal Enterprises has signed an agreement for sale of its Decision Resources Group (DRG) business to US-headquartered Clarivate Analytics for $950 million (over Rs 6,745 crore), and will use the money to reduce debt and to explore organic and inorganic growth opportunities.
The transaction is expected to be completed by the end of February 2020, Piramal Enterprises Limited (PEL) said in a statement.
PEL DRG Dutch HoldCo BV, a 100 percent subsidiary of PEL and the holding company for DRG, has signed a definitive agreement for sale of DRG to Clarivate Analytics for a consideration of $950 million, it added.
This includes $900 million on closing and $50 million to be received at the end of 12 months from the date of closing, PEL said.
On being asked about how the company plans to use the sale proceed, Piramal Group Chairman Ajay Piramal told PTI that it would be used to reduce debt and to explore organic and inorganic growth opportunities.
"We will use it to reduce debt and also to grow our existing businesses as well as look at some inorganic opportunities," he added.
"As a company, we have always believed that we should do what is in the best interest of shareholders and therefore if we feel the value that we can get by selling the business is good, we do it," Piramal said.
PEL had initially invested $650 million in 2012 to acquire DRG, out of which $260 million was infused as equity. It has realised 2.3 times its initial equity investment in rupee terms, the statement added.
"We are pleased to have grown DRG's market leadership over the last few years and believe that through this combination, Clarivate, with its size and scale, is well positioned to further accelerate DRG's growth potential," Piramal said in the statement.
Along with the ongoing equity capital raising exercise in PEL, this transaction not only further strengthens the company's balance sheet but also marks another step towards significantly unlocking value in future, he added.
"This transaction demonstrates our continued commitment to create sustained long-term value for all stakeholders," Piramal said.
DRG, the data, analytics and insights business of the Piramal Group, specialises in enabling pharma, biotech and medical technology companies to achieve commercial success in complex health markets with the creation of effective patient-centric commercial strategies.
"This is a milestone acquisition which doubles the size of our life sciences business, is accretive to our 2020 earnings and sets us up as an essential, end-to-end, industry-leading data and analytics provider in the highly attractive life sciences ecosystem," Clarivate Analytics Executive Chairman and CEO Jerre Stead said.
With this acquisition, Clarivate will be well-positioned in the $19 billion life sciences analytics market, which is enjoying double-digit growth, to support customers across the entire drug, device and medical technology lifecycle from research to outcome, the statement said.
Shares of Piramal Enterprises closed at Rs 1,627.05 per scrip on the BSE, up 5.18 percent from previous close.
For the 11 percent stakeholder looking for 20 percent returns, a lot depends on how he protects his investment and times his exit .<br /><br />
Piramal Enterprises on Friday said its board has approved raising of Rs 5,400 crore through a rights issue and preferential allotment of compulsory convertible debentures (CCDs)
The company, however, did not specify on what it intends to do with the money