Fosun to buy 74% in Gland Pharma for $1.1 bn
MUMBAI: Shanghai Fosun Pharmaceutical Group, a unit of China’s Fosun Group has agreed to acquire 74% of Indian drug company Gland Pharma Ltd for $1.1 billion, the Chinese drugmaker said on Sunday.
Fosun has agreed to cut the size of the stake it will buy in Gland Pharma to 74%, having previously targeted an 86% stake valued at about $1.26 billion. Fosun in a statement to the stock exchanges said that its board had approved the new plan to acquire 74%, which would see an investment of up to $1.09 billion. The firm has also delayed the closing date for the deal to October 3 from September 26, Reuters added.
Mint was the first to report that the shareholders of Gland Pharma Ltd, including buyout firm KKR and Co, were considering selling a stake of up to 74% under the automatic approval route to Fosun International after failing to secure government approval for an 86% stake sale.
The new structure was being considered as an alternative, in case approval for the deal, pending before the Cabinet Committee of Economic Affairs (CCEA) did not come through, Mint reported.
Regulations announced in June last year allow foreign direct investment (FDI) of up to 74% in existing pharmaceutical firms through the automatic route, while allowing foreign investments that involve acquiring more than 74% through the government approval route.
Hong Kong-listed Shanghai Fosun Pharmaceutical (Group) Co Ltd agreed to acquire approximately 86% in Gland Pharma for $1.3 billion in July 2016. The deal was cleared by the Foreign Investment Promotion Board (FIPB) in March, while the Competition Commission of India had approved it earlier in December 2016. FIPB referred the deal to CCEA in April.
In July, Bloomberg, citing people familiar with the matter, reported that CCEA had blocked Fosun’s bid to buy Gland Pharma. Other media reports since then have cited the surge in border tensions between India and China, as well as concerns over transfer of technology to Chinese companies, as the reason for the delay in approval.