China acquires Indian pharma company for $1.4 billion
- Shanghai Fosun Pharmaceutical has agreed to acquire a controlling stake in Gland Pharma for $1.4 billion
- First billion-dollar acquisition by a Chinese firm
- First instance of large FDI from China in Indian manufacturing
- Deal requires regulatory approval as it is a complete buy-out
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In what would be the first instance of large FDI from China in Indian manufacturing, Shanghai Fosun Pharmaceutical (Group) Co will sign a definitive agreement later on Wednesday to acquire a controlling stake in Hyderabad-based Gland Pharma in a $1.4 billion transaction said a report in The Economic Times. This would pave the way for the Chinese firm to expand its research and manufacturing capacity in India.
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Fosun has agreed to acquire 96 percent stake, which includes shares held by founders of Gland Pharma Ravi Penmetsa and family and private equity giant, KKR & Co LP. However another source said Gland will initially buy 86% of the company while Penmetsa may retain a 10% stake.
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The deal may need FIPB approval. "We will be signing the deal later today at Hong Kong and an official announcement will be made to the Chinese exchanges later," said a source, with direct knowledge of the matter. When contacted, KKR and Gland Pharma promoters declined to comment. Fosun was not immediately reachable for a comment.
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The Economic Times had reported on June 6 that Fosun has emerged as the front runner in a closely fought auction process, which saw US giant Baxter and private equity fund Advent make firm offers early May.
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The transaction will be the first billion dollar takeover of an Indian company by a Chinese one, with the few big deals confined to tech and e-commerce. The deal will have to get regulatory approvals from Indian authorities. As this will be a controlling acquisition by a Chinese player, the deal will undergo strict regulatory scrutiny..
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