Aurobindo Pharma Ltd and Intas Pharmaceuticals Ltd are in the race to acquire part of the European assets of Israeli generic drugmaker Teva Pharmaceutical Industries Ltd in a deal that, if completed, could be the biggest overseas acquisition by an Indian pharma company.
The assets include the oncology, pain management and women’s health divisions of the company, two people aware of the talks said on condition of anonymity. They added that the process, which is being managed by Morgan Stanley and Bank of America Merrill Lynch (BAML), is expected to receive bids that are upwards of $ 1 billion.
Spokespersons for BAML, Morgan Stanley and Intas Pharmaceuticals declined comment. Spokespersons for Aurobindo Pharma and Teva did not respond to e-mails seeking comment.
This will be the second time in less than a year that Aurobindo and Intas are vying for Teva’s assets. Last year, Aurobindo unsuccessfully bid for Teva’s Actavis UK Ltd and Actavis Ireland Ltd units and was pipped at the post by Intas, which paid close to £600 million (around Rs5,000 crore) to win the deal, Mint reported in October. The transaction was part of the European Commission’s antitrust divestiture requirement arising from Teva’s acquisition of Actavis. In July last year, Cipla Ltd, India’s fifth largest drug maker, acquired a portfolio of three products from Teva in the US. In November last year, Aurobindo Pharma acquired a few products from Teva in France.
If either Aurobindo or Intas acquire the assets, it will be the largest outbound pharma deal by an Indian company. The largest so far is Lupin Ltd’s acquisition of Gavis Pharmaceuticals Llc. and Novel Laboratories Inc. for $880 million in 2015.
“Both (Aurobindo and Intas) are in talks with banks to tie up funding for the final bids," said one of the two people cited in the first instance.
Several other international companies and private equity funds are also expected to participate in the bidding process. “Intas’s bid is likely to be in the range of $1 billion or slightly higher and the acquisition will be completely funded by debt," the first person added.
Promoted by the Ahmedabad-based Chudgar family, Intas Pharma is one of India’s largest closely held pharma companies and is backed by private equity firms Temasek Holdings Pte. Ltd and ChrysCapital.
In 2015-16, Intas Pharma earned close to $1 billion in revenue with a profit after tax of $130 million. More recent financials are not available.
Aurobindo Pharma posted sales of Rs15,090 crore and returned a net profit of Rs2,296 crore in the year ended March. During the first nine months of FY17, the company filed 23 Abbreviated New Drug Applications, said a research report by rating company India Ratings and Research Pvt. Ltd. The company’s recent corporate filings show that it has free cash balance of close to Rs880 crore and a moderate term loan repayment obligation of Rs300 crore over 2017-18, the India Ratings report added.