Fosun to buy 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, according to a statement Sunday evening, essentially reviving a deal that was widely speculated to have been blocked by the government.

Fosun has agreed to cut the size of the stake it will buy in Gland Pharma to 74%. Fosun was previously targeting to acquire 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 no more than $1.09 billion. The firm has also delayed the closing date for the deal to 3 October from 26 September, a Reuters report 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 China’s Fosun International after failing to secure government approval for an 86% stake sale so far.

The new structure was being considered as an alternative, in case approval for the deal, pending before the Cabinet Committee of Economic Affairs (CCEA) does 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 FIPB in March, while the Competition Commission of India 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 cited the surge in border tensions between India and China as the reason for the delay in approval.