Hyderabad-based Natco Pharma offers to acquire nearly 36 per cent stake in Adcock Ingram in Rs 2,100-crore deal

Should the offer be accepted, the company will hold a 35.75 per cent stake in the South Africa firm, valued at R4 billion (USD 226 million), the company stated in a regulatory filing

New Delhi: Natco Pharma on Wednesday said it has offered to acquire nearly 36 per cent stake in South African drug firm Adcock Ingram Holdings for up to Rs 2,100 crore in a cash deal.

The Hyderabad-based firm said it has submitted a firm intention offer to Adcock Ingram Holdings to buy out minority shareholders for a cash offer of R75 (USD 4.271) per share.

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Should the offer be accepted, the company will hold a 35.75 per cent stake in Adcock Ingram, valued at R4 billion (USD 226 million), it stated in a regulatory filing.

The acquisition amounts to 51,643,319 equity shares resulting in Natco shareholding to arrive at 35.75 per cent of the paid-up equity share capital in aggregate, it said.

Adcock Ingram is estimated at a valuation of R11 billion (USD 632 million).

It is envisaged that post-acquisition, Adcock will continue to operate as a private South African business, supported by two substantial strategic shareholders, Bidvest at 64.25 per cent and Natco at 35.75 per cent, including a prior held stake, the company stated.

Natco currently holds 0.80 per cent in Adcock Ingram.

“The proposed transaction will provide Natco Pharma with a well-established entry into the Southern African market. It will also allow Natco Pharma to tap into new revenue streams and expand our footprint in one of the largest and growing emerging markets, while providing a gateway to the African continent,” Natco Pharma CEO & Vice Chairman Rajeev Nannapaneni said.

Adcock Ingram generated a revenue of R9.6 billion (USD 536 million) in the last financial year and delivered a gross margin of 33.4 per cent.

“This is a significant moment in our company’s long history. This offer represents a huge vote of confidence in Adcock Ingram’s people, brands and business model, and the South African healthcare environment,” Andrew Hall, CEO, Adcock Ingram Holdings, stated.

Adcock Ingram will benefit from a partnership with a research-focused, innovative and vertically integrated pharmaceutical company, and over time South Africans will be beneficiaries of wider access to affordable medicines, he added.

In addition, the offer represents an attractive premium for the minority shareholders, who have supported company over the years, he said.

The estimated transaction completion time is four months, assuming no regulatory delays, Natco Pharma said.

Business operations will remain uninterrupted, with no changes to existing partnerships, joint ventures, or supplier relationships, it noted.

Natco Pharma shares ended 1.99 per cent up at Rs 1,034.50 apiece on the BSE.