November 3, 2017 / 12:46 PM / 2 years ago

Torrent Pharma to buy Unichem Labs' India business for $558 million

(Reuters) - Torrent Pharmaceuticals said on Friday it would buy more than 120 brands from Unichem Laboratories in India and Nepal, and its manufacturing plant at Sikkim.

The 36 billion rupee ($558 million) deal will be funded by internal accruals and bank borrowing, the Ahmedabad, Gujarat-based drugmaker said in a stock exchange filing.

The acquisition is on a going concern basis and is expected to deliver cost and revenue synergies in Torrent’s branded drugs business in India, the company added.

Unichem has not been able to leverage its slow-growing, mature brands portfolio, analyst said. But Torrent will be able to turn them around, as it has done with Elder Pharmaceuticals Ltd, they added.

Torrent acquired Elder Pharma’s branded formulations business for about 20 billion rupees in 2014.

Analysts expect Unichem to use the proceeds from the deal to ramp up its unprofitable international business.

The transaction will strengthen Torrent’s position in cardiology, diabetology, gastro-intestinals and central nervous systems therapies, Torrent chairman Samir Mehta said.

The deal includes the purchase of the brand Unienzyme, allowing Torrent to enter the over-the-counter drugs market, as well as brands including Losar, Ampoxin and Telsar.

Under the acquisition, which is expected to close by the end of 2017, more than 3,000 Unichem employees will join Torrent.

Both companies reported September-quarter results on Friday, with Torrent posting a 1.4 percent drop in profit, while Unichem’s profit more than doubled.

Reporting by Jessica Kuruthukulangara and Aby Jose Koilparambil in Bengaluru; Editing by David Goodman and Alexander Smith

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