Mumbai: Debt-strapped Indian drugmaker Wockhardt Ltd will receive less than half the $130 million (around Rs630 crore) proceeds from the sale of its nutrition business to US drug and nutritional products maker Abbott Laboratories Inc.
The remaining proceeds will be shared between Wockhardt subsidiaries Wockhardt EU Operations (Swiss) AG and Vinton Healthcare Ltd, and Carol Info Service Ltd, in which the drugmaker’s founding Khorakiwala family owns a 63.73% stake.
In a notice sent to shareholders, Wockhardt sought their approval by postal ballot to sell the nutrition business for Rs281.6 crore. In a similar notice, Carol Info Service sought approval for a Rs50 crore transaction. It was engaged in contract manufacturing for Wockhardt’s nutrition business.
Cash-strapped: On Monday, Wockhardt Hospitals announced the sale of 10 hospitals to Delhi-based Fortis Healthcare. Kedar Bhat / Mint
The two Wockhardt subsidiaries will likely receive the remaining money although the notice to shareholders made no mention of the amount. Copies of the notices, which were reviewed by Mint, have also been filed with the Bombay Stock Exchange.
Wockhardt sold the nutrition business to Abbott Laboratories in July to raise funds to pay off part of its immediate debts of Rs1,414 crore.
On Monday, the Khorakiwala family announced the sale of 10 hospitals run by its privately-held healthcare company Wockhardt Hospitals Pvt Ltd to Delhi-based Fortis Healthcare Ltd for Rs909 crore.
The promoter of Wockhardt and Carol—Khorakiwala Holdings and Investments Pvt Ltd—will also receive payments on account of the non-compete agreement signed with Abbott for staying out of the nutrition business for the next three years.
A person close to the nutrition business deal said Khorakiwala Holdings and Investments will receive an additional Rs40-50 crore on account of the non-compete agreement. The person didn’t want to be named.
A Wockhardt spokesperson said the company had made necessary filings to the stock exchanges on the sale transaction.
Wockhardt, India’s sixth largest drug maker by sales, had a significant presence in the domestic market for paediatric and adult nutrition products, with a portfolio that included infant foods and adult protein supplements.
In 2006, the company acquired leading brands such as Farex, Dexolac and Nusobee infant formulas and Farex weaning cereal.
It also acquired a new manufacturing plant in Punjab for about Rs93 crore by buying Dumex India Ltd. Dumex was the market leader in the paediatric nutrition segment at the time.
Abbott, in a media statement in July, had said that these transactions are subject to customary closing conditions and various approvals.
It expects the transactions to close in the second half of 2009.
Wockhardt’s promoters had earlier this year sold the company’s animal healthcare business in India as well as its pharma business in Germany in two separate transactions for undisclosed amounts. While the company sold its veterinary business to French animal health company Vetoquinol SA, the German drug business EsparmaGmbH was bought by Germany’s Mova GmbH.
Ravi Ananthanaryanan contributed to the story.