Nestle India invest ₹705 crore in JV with Dr Reddy’s Labs, transfers medical nutrition business; check details

In a stock exchange notification on August 1, Nestle India said that it has executed a business transfer agreement for the slump sale of its existing medical nutrition and nutraceuticals business to the JV at a lump sum consideration of ₹218.9 crore

The JV company – named Dr Reddy’s and Nestle Health Science Ltd (formerly Dr Reddy’s Nutraceuticals Ltd) – was incorporated earlier this year to bring innovative nutraceuticals brands to consumers in India and other agreed territories.

At the time of announcing the JV, Nestle India said that the joint venture will help the partners combine their strengths and grow their complementary nutraceuticals portfolios in categories such as metabolic, hospital nutrition, general wellness, women’s health and child nutrition for consumers across India.

On Thursday, Nestle India informed the bourses that it has subscribed to 70.55 crore equity shares of face value of ₹10 each of the JV company for an amount aggregating to ₹705.55 crore on rights basis.

Post the acquisition of aforesaid equity shares, out of the total paid-up share capital of the JV entity, Nestle India will hold 49% shareholding and DRL will continue to have 51% shareholding.

As per the definitive agreement dated April 25, the funds raised by the JV company through the rights issue would be utilized to acquire the respective nutritional health solutions business and/or other resources from Nestle India and Dr Reddy’s Laboratories between the JV partners and for general corporate purpose including working capital requirements of the JV company.

Nestle India shares are trading 1.1% higher at ₹2,511 apiece on the NSE at 1:30 pm on Friday. On the other hand, Dr Reddy’s Laboratories shares are up 0.78% at ₹6,941 apiece.