Mumbai: Drugmaker Piramal Healthcare Ltd said it will sell its diagnostic services unit to Super Religare Laboratories Ltd (SRL) for Rs600 crore to focus on fewer and larger businesses left in its basket.
Piramal will transfer 107 of its laboratories to the Malvinder Singh-promoted SRL.
It will receive Rs300 crore upfront while the balance Rs300 crore would come over next three years, Piramal chairman Ajay Piramal, said on Wednesday.
“We will grow in three of our existing businesses... customs manufacturing business, critical care space and the OTC (over the counter) space,” Piramal told Reuters over the telephone.
“We want to now focus on fewer and larger businesses... In the diagnostics business, we cannot grow to a significant size unless we do some acquisition... and we could not find an opportunity,” he added.
Piramal Diagnostics Services had reported a revenue of more than Rs200 in FY10, the company said.
It had operating margins of more 20%, Piramal added.
Post the deal, Piramal would continue to be involved in the diagnostics business by way of representation on SRL’s board of directors and its executive committee, it said.
Analysts said that while the deal was positive for Piramal, its plans after the sale was crucial.
“They (Piramal) have got a very good value, which is three times their sales... but it is critical to see how they utilise this money,” Sarabjit Kour Nangra, vice-president research at Angel Broking, told Reuters.
Piramal is heading towards a situation where they have lot of cash on balance and less (cash) coming from sales,“ another analyst with a Mumbai-based brokerage said.
Piramal Healthcare has announced a number of acquisitions and sell-offs over the last four months, including the sale of its domestic formulations business to Abbott Laboratories for $3.72 billion on 21 May.
It has also bought rights for Cipla’s emergency contraceptive drug brand ‘i-pill’ for $21 million and the injectable anaesthetic products business of unlisted Bharat Serums and Vaccines Ltd.
The drugmaker signed a definitive agreement to acquire Canadian medical device maker BioSyntech’s assets for C$3.9 million.
At 11:16 a.m., shares of Piramal Healthcare, which had risen more than 2% in early trade on Wednesday, eased to Rs513.15, up 0.64% in a firm Mumbai market.
SRL’s shares are not listed on any stock exchange.