Torrent secures funding to buy 33% stake in Cipla
What's the story
Torrent Pharmaceuticals Ltd. is reportedly eyeing a 33% stake in Mumbai-based drugmaker Cipla, having secured at least $5 billion in funding from a group of overseas banks.
Torrent is keen on buying the entire stake or a portion held by the family shareholder group, but only if the valuation is below $11 billion.
The company may partner with private equity funds to bid for the 33% stake, which is valued at around $3.9 billion based on Cipla's current stock price.
Details
Cipla's founding family demands a higher valuation
The founding family of Cipla is reportedly seeking a valuation of about $13 billion for the company.
Discussions are ongoing, and Torrent may choose not to proceed with an offer. It's uncertain whether the founding family will agree to sell at Torrent's preferred valuation.
Since late July, when local media reported that the founding family might sell their stake, Cipla's shares have climbed as much as 19%, resulting in a current valuation of roughly $11.7 billion.
What Next?
Cipla operates in over 80 countries
If Torrent Pharmaceuticals successfully acquires the 33% stake in Cipla, it would significantly bolster its position in India's drug manufacturing sector.
Established in 1959, Torrent has a market value of around $7.8 billion and has expanded through numerous acquisitions over the past two decades.
Cipla gained worldwide recognition by pioneering affordable, generic HIV drugs across Africa and has further increased its sales during the pandemic with COVID-19 treatments like remdesivir.
It offers more than 1,500 products across various therapeutic categories.