Dr Reddys Laboratories Ltd and 3i, Europe's leading private equity house, have entered into a definitive agreement providing for the strategic investment by Dr Reddys to acquire 100% of betapharm Group, the fourth-largest generic pharmaceuticals company in Germany, for a total enterprise value of € 480 million in cash.

According to the company release, the transaction will be funded using a combination of the company's internal cash reserves and committed credit facilities.

Dr Anji Reddy, chairman, Dr Reddys, said, "We see our investment in betapharm as a key strategic initiative towards becoming a mid-sized global pharmaceutical company with strong presence in all key pharmaceutical markets. Betapharm has created a strong growth platform and is well positioned for the future and we are looking forward to partner with them in building a strategic presence in Europe."

Commenting on the strategic initiative, G V Prasad, vice-chairman and CEO, Dr Reddys, said, "We are very excited with our strategic investment in betapharm. betapharm with its differentiated business model has all the key elements for achieving success in the fast growing generics market in Germany. We strongly believe that this strategic investment will generate substantial opportunities for long-term value creation for both the companies. The combination of these two companies will enable betapharm to continue to expand its growth trajectory and at the same time provide a strong foundation to leverage Dr Reddy's global product development and marketing infrastructure to build a significant generics business in Europe in the long-term. We are excited to partner with the highly dedicated and motivated team at betapharm to build a future of growth and leadership for Dr Reddy's as well as betapharm."

Further financial terms and conditions of the transaction will not be disclosed. The transaction is subject to customary closing conditions and is expected to close in the first week of March 2006.

Rothschild acted as financial advisors and Freshfields Bruckhaus Deringer acted as external legal counsel to the Company in this transaction.

Founded in 1993, betapharm is the fourth-largest generics company in Germany with a market share of circa 3.5%. betapharm markets high-quality generic drugs with focus on long-term therapy products with high prescription rates. betapharm is the fastest growing generics company over the past 5 years in the top 10 in Germany with a strong track record of successful product launches. betapharm's current portfolio comprises about 145 marketed products. Located in Augsburg, Germany, betapharm currently employs about 370 people including a sales force of about 250 with gross turnover of € 164 million in 2005.