India’s second-biggest pharma deal: Torrent Pharma gets CCI nod to buy stake in JB Chemicals

The Competition Commission of India (CCI) has approved Torrent Pharmaceuticals Ltd’s proposed acquisition of JB Chemicals & Pharmaceuticals Ltd, subject to voluntary modifications offered by the companies.

The approval comes after Torrent in June this year announced plans to acquire a majority stake in JB Chemicals in a ₹19,500-crore deal, the second-biggest transaction in India’s pharmaceutical sector after Sun Pharmaceutical Industries’ acquisition of Ranbaxy Laboratories in 2015.

The fair-trade regulator said the proposed combination involves Torrent acquiring a shareholding in JB Chemicals, followed by the amalgamation of the latter with the acquirer.

"The proposed combination relates to the acquisition of shareholding by Torrent Pharmaceuticals Ltd (acquirer) in JB Chemicals & Pharmaceuticals Ltd (target) and the subsequent amalgamation of the target with the acquirer," the regulator said in a release.

Torrent Pharmaceuticals, the flagship company of the Torrent Group, is engaged in the manufacturing and sale of pharmaceutical formulations across multiple therapeutic segments.

JB Chemicals manufactures and markets a wide range of formulations and active pharmaceutical ingredients (APIs), and also provides contract development and manufacturing (CDMO) services.

“The Commission approved the proposed combination subject to compliance of voluntary modifications offered by the Parties,” the CCI said.

After the completion of the deal, Torrent Pharmaceuticals will become India's second most valued pharma company.

In June, Torrent said it would acquire a 46.39% stake from promoters Tau Investment Holdings Pte Ltd, an affiliate of global investment firm KKR, for about ₹11,917 crore. It would also buy another 2.8% from certain employees of JB Chemicals for around ₹719 crore.

Following this, the company planned to make an open offer for an additional 26% stake in accordance with Sebi’s listing norms, amounting to ₹6,842.8 crore. After completion of the transactions, JB Chemicals will be merged with Torrent Pharmaceuticals.

Torrent Pharma reported annual revenues of over ₹11,500 crore, while the Group’s total revenues stand at around ₹45,000 crore.

In 2020, KKR acquired a 65% stake in JB Chemicals & Pharmaceuticals. Earlier this year, in March, the private equity firm offloaded a 5.8% stake for ₹1,460 crore through open market transactions.