In India's second biggest pharma sector deal, Torrent Pharma to acquire JB Chemicals for ₹19,500 crore; all key details to know

Torrent will acquire a 46.39% stake from promoters Tau Investment Holdings Pte Ltd (a unit of KKR, the global investment firm) for about ₹11,917 crore. It would additionally buy another 2.80% from certain employees of JB Chemicals at the same acquisition price of ₹1,600 per share (totalling ₹719 crore).

Post this, it would make an open offer for buying 26% from the open market, as per listing norms, at a price of ₹1,639.18 per share (totalling ₹6,842.8 crore).

The open offer price is at a discount to Friday's closing price of ₹1,799.35 apiece for JB Chemicals on the BSE.

This will be the second biggest deal in the pharma sector ever, behind Sun Pharmaceutical Industries' 2015 acquisition of Ranbaxy Laboratories.

"Torrent Pharmaceuticals Limited and global investment firm KKR today announced that Torrent has entered into definitive agreements to acquire a controlling stake in J B Chemicals and Pharmaceuticals from KKR at an equity valuation of ₹25,689 crores (on a fully diluted basis), followed by a merger of the two entities," a company statement said.

Post share purchase, JB Pharma will merge into Torrent. Every shareholder holding 100 shares in JB Pharma shall receive 51 shares of Torrent.

Strategically, the deal gives Torrent access to JB Pharma's leading brands in the chronic segment and opens up untapped therapeutic areas like ophthalmology.

Besides creating operational synergies, the deal is expected to strengthen Torrent's market share in the Indian pharmaceutical market and diversify its platform into contract development and manufacturing.

The acquisition will strengthen Torrent's market share in the IPM as well as give entry into the CDMO segment with long-term potential. It would also have consolidation in key international markets and give greater ability to scale up.

IPM stands for Indian Pharmaceutical Market.

CDMO refers to a contract development and manufacturing organisation. CDMO provides end-to-end, fully integrated drug development and manufacturing solutions and services to biotechnology and pharmaceutical companies.

As per the deal, Torrent will acquire a 46.39% stake (on a fully diluted basis) through a share purchase agreement (SPA) and an additional potential acquisition of up to 2.80%, aggregating to 49.19%, which will trigger a mandatory open offer of 26%.

What companies say

Samir Mehta, Executive Chairman, Torrent Group, said, "Torrent's deep India presence and JB Pharma's fast-growing India business, combined with the CDMO and international footprint, offer immense potential to scale both revenue and profitability.

"This strategic alignment furthers our goal of strengthening our presence in the Indian pharma market and building a larger, diversified global presence. Moreover, the CDMO platform provides a new long-term avenue of growth for Torrent."

JB Pharma CEO Nikhil Chopra said that the company has built a strong foundation over the past five years and expressed confidence that joining Torrent will unlock new opportunities to enhance healthcare access across markets.

"Over the past five years, JB Pharma has emerged as one of India's fastest-growing pharmaceutical players, owing to KKR's strategic guidance, stewardship of our independent directors and focused strategic and executional excellence by the management team.

"We have built a strong foundation to deliver market-leading growth, as well as consistent improvement in profitability in the medium and long term. As we now enter a new chapter alongside Torrent Pharmaceuticals, we are confident that the combined strengths of our organisations will unlock greater opportunities to enhance healthcare access across our markets, Chopra said.

Gaurav Trehan, Co-Head of Asia Pacific and Head of Asia Pacific Private Equity at KKR and CEO of KKR India, said, "JB Pharma's transformation under our stewardship is a testament to KKR's ability to scale high-quality companies. We believe the company is well-positioned for continued growth ahead and wish the team every success in its next chapter with Torrent."

In 2020, KKR had bought a 65% stake in JB Chemicals & Pharmaceuticals.

In March this year, KKR divested a 5.8% stake in JB Pharma for ₹1,460 crore through open market transactions.

About JB Chemicals

J.B. Chemicals and Pharmaceuticals Limited, established in 1976, is one of India's leading pharmaceutical companies. It is engaged in the business of manufacturing and marketing of diverse range of pharmaceutical formulations, herbal remedies and Active Pharmaceutical Ingredients (APIs).

The company offers a wide range of solutions which include tablets, capsules, herbal syrups, lozenges and injectables, covering therapeutic categories of cough & cold (respiratory), dermatology, gastroenterology, cardiology and radiology.

Besides supplying branded generic formulations to several countries, it also manufactures medicated and herbal lozenges. The company has a pan-India presence and exports its finished formulations to over 40 countries, including the USA.

About Torrent Pharma

Torrent Pharma, the flagship company of the Torrent Group, is one of the leading pharma companies in the country. The company is one of the leading players in the therapeutic segments of cardiovascular (CV), central nervous system (CNS), gastro-intestinal (GI) and women's healthcare (WHC).

It also has a significant presence in diabetology, pain management, gynaecology, oncology and anti-infective segments. Torrent Pharma's competitive advantage stems from its world-class manufacturing facilities, advanced R&D capabilities, extensive domestic network and widespread global presence in over 50 countries.