Cadila Healthcare trumps peers, in talks to acquire Claris Lifesciences for whooping Rs 3,400 crore

Surpassing its domestic and global peers, Cadila Healthcare has come up as the frontrunner to acquire the generic sterile injectables business of Ahmedabad-headquartered Claris Lifesciences Ltd (CLL).

As per sources, the last minutes negotiations are underway between the both companies, including tax and other financial matters. A formal announcement is expected next month as the deal has not yet closed.

Cadila Healthcare, the Zydus Cadila Group flagship, is likely to pay a significant premium, valuing the company between Rs 3,100 crore - Rs 3,400 crore.

For 12 months ending December 31, 2014, Claris Lifesciences business reported revenues of Rs 405.6 crore and EBITDA of Rs 149.4 crore (37% EBITDA margin).

Presently, the market cap of parent Claris Lifesciences including all the different businesses is Rs 1,793 crore.

The Cadila Healthcare spokesperson told ET, as a matter of policy, the company does not comment on market speculation. A Claris spokesperson however denied any such development.

Economic Times in February first reported about the business being put on the block.

The financial daily reported the possible deal underscores amplified interest in the business in the backdrop of a global shortage of injectables -- drugs that are delivered through vials, syringes and bags, as well as pumps. The supply problems have driven many transactions both in India and overseas, including Pfizer's $17 billion takeover of Hospira, earlier this year.

Pankaj Patel-led Cadila had competition from domestic rivals like Lupin who were also pursuing the opportunity to buy the asset, but valuations apart, comfort between the two Gujarat based entrepreneurs is said to have provided extra comfort to Arjun Handa, the promoter, vice-chairman & managing director of CLL.

ET reported both Patel and Handa are from Ahmedabad and have been old industry associates. Even global players like Pfizer, Amneal and Novartis, among others, were initially in the fray, added sources.

One of the sources told ET, if talks with Cadila breaks down at the wire then the prospects of Lupin, another potential contender, to walk away with the asset could improve considerably.

Cadila, among the top five pharmaceuticals companies in the country in terms of revenues --- these amounted to Rs 8,651 crore for year ended 31 March 2015 ---has been acquisitive for a while having executed 17 M&A deals since 1995.

(Image: Indiatimes)