Detergent chemical major, Nirma Group, is leading the race to acquire Glenmark Life Sciences (GLS), according to a report by The Economic Times (ET). Glenmark Pharmaceuticals Ltd owns an 82.8 per cent stake in GLS, which is a leading active pharmaceutical ingredient (API) platform.
ET quoted sources as saying that the conglomerate emerged as the sole bidder late last week, the deadline to submit firm offers for the business, PAG-backed Sekhmet Pharmaventures did not submit a final offer after intense negotiations. Nirma Ltd and Sekhmet Pharmaventures were among the shortlisted bidders for a controlling stake in GLS.
For acquiring GLS, Nirma will employ healthcare subsidiary Aculife Healthcare as the likely vehicle. Nirma Group is also looking to raise up to Rs 7,000 crore for the acquisition and expansion of its existing facilities, investment banking sources said.
ET quoted sources as saying that Nirma is likely to have offered a slight premium to the current market price. If the deal goes through and the open offer is fully subscribed, Nirma will have to play a total of Rs 6,664-7,000 crore, they added. To finance the transaction, Nirma is holding talks with Standard Chartered Bank, Investec, Nomura, and Axis Bank.
Earlier, investment banking sources told Business Standard that Nirma has indicated that its diversification plans will be undertaken for acquisitions ranging from Rs 5,000 crore and Rs 7,000 crore in either domestic or overseas markets. The firm has not specified its acquisition target while initiating talks for a fund-raising exercise.
Nirma, which generated a profit of Rs 909 crore in the financial year 2022-2023 (FY23), is expected to generate annual cash accruals of more than Rs 1,700 crore as against debt repayment of Rs 650-750 crore in FY24. The Nirma group acquired Stericon Pharma, an eye drops and contact lens maker, for around Rs 350 crore, in April this year.
Once done, the transaction will help promoter Glenn Saldanha deleverage the Glenmark Pharmaceuticals balance sheet.
At 12:15 pm, GLS was trading 0.5 per cent up at Rs 664 a share on the NSE.