Torrent Pharmaceuticals is extending a deal with JB Chemicals, which would result in the company holding a majority stake after the last transaction is processed. This proposal for a majority stake in JB Chemicals is expected to close within 15 to 18 months of the beginning of the deal. It is a strategic deal for Torrent Pharmaceuticals, as on its completion, it will emerge as the second-largest deal in the Indian pharmaceutical industry. Moreover, Torrent Pharmaceuticals has grown in its sector recently due to its strategy. This strategy, too, will result in a positive growth of the Pharmaceutical company.
How much stake is Torrent Pharmaceutical acquiring in JB Chemicals?
As per information, Torrent Pharmaceutical is acquiring a majority of 46.39 percent in JB Chemicals. This figure will be acquired from JB Chemicals’ promoters, Tau Investment Holdings Pte Ltd., a leading global investment firm, for a major valuation. The valuation for the unit will be approximately ₹11,917 crores, which will contribute to the growth of Torrent Pharmaceuticals.
Other than that, Torrent is planning to acquire 2.80 percent from a few employees at JB Chemicals, who can buy their shares for the acquisition price of ₹1,600 per share. It will be totaled for approximately ₹719 crores, which will help the company to manage its position.
The last part is that Torrent Pharmaceuticals will launch an open offer for the open market for the shares. They are willing to acquire 26 percent of shares through open market operations. The share price is valued at ₹1,639.18, which will total to ₹6,842.8 crores, if it goes as planned.
Torrent Pharmaceuticals’ targets and strategy for merging
As mentioned in the presentation to BSE, Torrent Pharmaceuticals will have its last stage of the deal cleared within 15 to 18 months. Other than BSE, the company has to get approval from the Competition Commission of India (CCI), stock exchanges, and the Securities and Exchange Board of India (SEBI) for the deal.
JB Chemicals will merge with Torrent Pharmaceuticals after the last transaction of the shares is processed and the deal is finished. Moreover, every 100 shares held by the JB Chemicals’ shareholders will mean, they have acquired 51 shares of Torrent. This calculation is as per the share swap ratio of both companies.
Benefits to Torrent Pharmaceuticals after the deal
This deal has opened new gateways for Torrent Pharmaceuticals as it can access the brands in JB Chemicals. The access can help Torrent establish a new therapeutic area of ophthalmology in the company. Other than that, Torrent will climb up the ladder in the Indian Pharmaceutical sector, where there is a high scope for development. It will also aim to generate operational synergies in the hospitality sector.
By strengthening its roots in the Indian Pharmaceutical sector, it is willing to enter the CDMO segment. It will be a long-term success for the company and a ticket to expand into the international market.
Conclusion
In 2015, Sun Pharma-Ravybax had the largest deal in the pharmaceutical sector, which led to considerable growth in the company. Now, Torrent Pharmaceuticals has extended a deal to JB Chemicals, which will become the second-largest deal in the pharmaceutical sector on its completion. Both companies demand positive growth and expansion in the international market. Their deals are the biggest anchor to their goals. Torrent has strategized its moves in detail and is expected to climb the ladder in the Indian Pharmaceutical sector with huge success.
