‘Cabinet Yet to Decide on Fosun-Gland Deal’
New Delhi: The Cabinet Committee on Economic Affairs (CCEA) has not yet taken a call on the Gland Pharma-Fosun deal, a government official told ET.
The proposal was listed for CCEA’s consideration two weeks back but could not be taken up.
“It is wrong to say that the deal has been rejected,” the official said. There have been reports that the CCEA has rejected Chinese firm Shanghai Fosun Pharmaceutical’s proposed $1.3 billion takeover of Indian pharma firm Gland Pharma.
There is speculation that the deal has got stalled because of the heightened India-China border tensions.
The now-abolished Foreign Invest- ment Promotion Board (FIPB) had in March this year approved Fosun’s proposal to acquire 86% stake in the injectable drugmaker. This included 36% stake held by KKR & Co. The deal was announced in July 2016. The current FDI policy allows 100% FDI in brownfield pharma (acquisition of stakes in existing pharma companies), but is subject to government approval. This condition was imposed following concerns that large scale buyout of Indian pharma companies by MNCs will reduce supply of cheap medicines.
Such acquisitions are finally cleared by the CCEA.
In a Hong Kong stock exchange filing on July 27, Fosun had said “…the approvals of the relevant PRC authorities in respect of the acquisition have been obtained and the United States anti-trust filings and the Indian anti-trust filings have been completed.”
“In addition, the acquisition was reviewed by the Indian Foreign Investment Promotion Board, which has been recommended to the Cabinet Committee on Economic Affairs of India for further review,”it said adding that the termination date has been extended to September 26, 2017.
The official did not say if the CCEA would take up the proposal in its next meeting.A finance ministry spokesman had said report was ‘totally speculative’’ and that it had not come up before CCEA.
There is a speculation that govt may block the $1.3-b deal due to Indo-China tensions