Mumbai: In line with its plan to exit from non-core operations and raise money to pare rising debt, Vijay Mallya-led UB Group will divest its 10.27% equity in drug maker Aventis Pharma Ltd, the Indian subsidiary of French multinational drug maker Sanofi-Aventis SA, for around Rs414 crore.
Graphic: Yogesh Kumar / Mint
The group has been a significant minority stakeholder and one of the key Indian promoters of Aventis Pharma, formerly Hoechst Fedco Pharma Pvt. Ltd, since 1956 and Mallya has been its chairman since 1983.
The group, which is under pressure due to heavy debt that it raised for new business ventures such as Kingfisher Airlines Ltd and a few other overseas acquisitions within the spirit business, has been trying to raise money through various ways. As on 31 December, it had a debt of around Rs14,600 crore. Among group companies, Kingfisher Airlines has the largest debt on its books—Rs7,415 crore.
In October, it had raised Rs300 crore by placing some 3.5 million treasury stock of its spirit company United Spirits Ltd with investors.
UB Group chief financial officer Ravi Nedungadi told Mint proceeds from the stock sale will be used to settle the debts of United Breweries Holdings Ltd, the group holding company. United Breweries Holding’s debt was to the tune of Rs1,606.71 crore in December.
“The parent company (of Aventis Pharma) Sanofi is keen to consolidate and extend its India commitment,” Nedungadi said. “For the UB Group, the Aventis stake was non-core and hence the stake sale.”
Aventis Pharma said on Monday that its foreign promoter Hoechst GmbH plans to raise its stake in the company to 60.37% by acquiring 10.27% stake held jointly by four UB Group companies—Mallya Pvt. Ltd, United Breweries Holdings, McDowell Holdings Ltd and Kingfisher Finvest India Ltd.
Hoechst has valued the 2.3 million shares at Rs1,750 apiece. The transaction will take place on or after 30 March, an Aventis note to the National Stock Exchange (NSE) said.
UB Group did not issue any statement.
Aventis jumped 3.84% to close at Rs1,827.25 on the Bombay Stock Exchange (BSE), while shares of UB Holdings and McDowell Holdings rose 3.25% and 2.19%, respectively. BSE’s bellwether equity index, the Sensex, slipped 0.95%.
The Aventis note to NSE said the deal is in the nature of an inter se transfer among the qualifying promoters and is eligible for exemption from an open offer obligation to the minority shareholders of Aventis Pharma.
An inter se transfer between promoter group entities are exempted from open offer provisions of the Indian capital market regulator. The norm exempts inter se transfers between group companies, promoters and collaborating foreign shareholders.
A stake acquisition in a listed company otherwise triggers a mandatory open offer to minority shareholders by the acquirer if the deal crosses 5% of the total equity in a year under creeping acquisition norms of the capital market regulator.
N. Sundaresha Subramanian contributed to this story.