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Torrent Pharmaceuticals is likely to walk away with private equity firm KKR’s near 54 per cent stake in smaller rival JB Chemicals and Pharmaceuticals for a deal size of ₹17,000-18,000 crore or even higher, sources said.
According to sources KKR initially started the dialogue with Torrent Pharma to sell its stake in the Mumbai-based pharmaceutical firm but it has also been in talks with some other drug manufacturers and private equity firms.
The buyer will most likely be a pharmaceutical company as private equity firms would find the valuation on the high side, said a person not related to the transaction but aware of developments. Among the drug companies, Ahmedabad-based Torrent Pharma was best placed for the acquisition, other sources said.
KKR declined to comment on the deal, and Torrent Pharma did not respond to an email seeking clarification.
In 2020 KKR acquired a 54 per cent stake in JB Pharma for a little over ₹3,100 crore at ₹745 a share. Since then the stock has appreciated 2.6 times and today it hit a new 52-week high of Rs 1958 in intra-day trades, up 65.5 per cent from the low hit last year in July. The shares have appreciated over 13 per cent since April 1 this year.
At the current market price, KKR’s 53.77 per cent stake in JB Pharma is worth ₹15,965 crore, while the drug maker’s market cap is around $3.6 billion.
Growth and synergy
JB Pharma’s EBITDA has risen nearly 3 times from FY19 to FY24 , with a good portion of the growth coming over the last couple of years under the stewardship of KKR. Revenues have more than doubled during the same period . It ended FY24 with net profit of ₹553 crore on revenue of ₹3,484 crore.
The company ranks among the top 20 in chronic therapies, which grew by 14 per cent last year compared to the industry growth of 10 per cent. Its chronic portfolio is spread across cardiology, nephrology, gastroenterology, respiratory, gynaecology and other segments.
Torrent Pharma’s branded generics business contributes around 72 per cent to its total revenues and its product portfolio includes drugs for cardiovascular, central nervous system, gastrointestinal, gynaecology, among others.
For the fifth largest pharma company in the country the acquisition would have obvious synergies in boosting its chronic portfolio, while giving it access to JB Pharma’s contract manufacturing business.
Shares of Torrent Pharma have risen over 18 per cent in the past three months. It hit a 52-week high at ₹3,257.15 last week.
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