Strides Arcolab has entered into a definitive agreement for the sale of its specialties subsidiary, Agila Specialties Private Limited and its overseas specialties subsidiary, Agila Specialties Asia Pte. Limited, Singapore to Mylan Inc. This is the third largest acquisition deal in the country after the Ranbaxy-Daichii ($4.6 billion in June 2008) and Abbott Piramal ($3.72 billion in September 2010). The transactions will be completed within six months, based on Foreign Investment Promotion Board (FIPB) approval.
Under the terms of the agreement, Strides and its subsidiary will receive an aggregate sum of US$ 1.6 billion (Rs. 8640 crore) in cash on closing and a potential additional consideration of up to US$ 0.25 billion or Rs. 13.5 crore subject to the satisfaction of certain conditions by Strides.
As announced simultaneously, the division recorded sales of US$ 255 million and EBITDA of US$ 86 million for the historical year ended December 31, 2012.
The transaction has been independently approved by the respective Board of Directors of Strides and Mylan.
Following successful closing of the transaction, Strides proposes to utilize proceeds towards, inter alia, retiring debt, providing a pre-tax return of approximately US$ 700 million to US$ 800 million to shareholders, and costs related to the satisfaction of contingent conditions.
The Bengaluru-based Agila is a leading global specialty injectables business focused on key domains including oncolytics, penems, penicillin, cephalosporins and ophthalmics in India and overseas. It operates from nine global manufacturing facilities, including one of the largest sterile capacities in India and amongst the largest lyophilisation capacities in the world.
Headquartered in Pittsburgh, Pennsylvania, USA, Mylan is a global pharmaceutical company with a growing portfolio of more than 1,100 generic pharmaceuticals and several brand medications. In addition, it offers a range of anti-retroviral therapies and is one of the largest active pharmaceutical ingredient manufacturers. It markets products in around 140 countries employs over 20,000 people.
Strides will continue to operate and develop its pharma business and front-end businesses in India and Africa. It will also focus on developing a fully integrated biotech business which will be fully funded post this transaction.
Commenting on the transaction, Arun Kumar, executive vice chairman and group CEO, Strides Arcolab, said, “The sale of Agila demonstrates our commitment to maximizing shareholders value. Our investments, together with the operational excellence of our employees, have led to the creation a global, high-quality specialty injectables business with an industry-leading pipeline and best-in-class infrastructure. We believe Agila, its partners, customers and employees across markets will benefit significantly from Mylan’s global reach in the global generic and specialty pharmaceutical sector. I am excited by the combination of our Agila business with Mylan as it allows the latter to leverage its operational base to become a leading global injectables company in the coming years.”
“Mylan’s long-standing commitment to quality, its track record of integrity and reliability, and powerful global platform make it the perfect fit for this business, both culturally and from a commercial perspective,” he added.
The transaction is an endorsement of the world-class capabilities of our team and serves as a perfect bolt-on strategy for the future, said VS Iyer, CEO, Agila Specialties.
Heather Bresch, CEO, Mylan, said, “The addition of Agila to Mylan’s existing injectables platform will immediately create a new, powerful global leader in this fast-growing, attractive market segment and accelerate our target of becoming a top-three global player in injectables.”
The transaction is subject to customary conditions, including receipt of required regulatory approvals.
Jefferies International Limited is acting as sole financial advisor to Strides Arcolab. Herbert Smith Freehills LLP is acting as lead international counsel, supported by DSK Legal, Haynes and Boone, LLP, and Pinheiro Neto Advogados.
All long several global pharma companies were eyeing Strides Arcolab and specially Pfizer came close to the Agila deal at $2 billion (Rs. 10,886 crore). It may also be recalled that in 2005, Strides merger with Matrix Labs fell through and in 2006 Mylan acquired the latter for $736 million. Now Mylan has called the trumps to acquire Strides’ subsidiary Agila, pointed out industry experts.