Bangalore-based Strides Arcolab, on Monday, said it has entered into an agreement with Chennai-based Bafna Pharmaceuticals to acquire majority stake of its branded generic business for a cash consideration of Rs 48.1 crore.
The transaction is expected to close by end of September and is subject to customary closing conditions and statutory approvals.
Through this acquisition, Strides will pick up global rights of Bafna's flagship brand Raricap. It is the 8th largest in oral haematinic segment in India with 8 SKU's in oral and liquid forms with an annual revenue of Rs 20 crore. The brand was acquired by Bafna from Johnson and Johnson in 2011 and has grown at CAGR of approximately 64% in the last three years.
The India branded generics business of Bafna is valued at Rs 65 crore and the business in its entirety will be transferred to a special purpose vehicle (SPV), in which Strides will hold 74% stake, Strides Arcolab said in a statement.
Strides will pay a consideration of Rs 48 crore in cash to Bafna and balance as 26% equity participation in the SPV. The intellectual properties (IPs) and manpower will be transferred to the SPV as part of the business transfer and Bafna will continue to manufacture these products for the SPV for a period of five years, and the SPV will have global rights for Raricap brand.
Arun Kumar, founder and group CEO of Strides Arcolab, said in a statement, "This acquisition provides necessary impetus to our domestic branded generics business and the transaction is in line with our strategy to grow the company's branded business. The transaction will strengthen our reach to newer markets with a wider portfolio of products."
This acquisition is also expected to strengthen its women & child care portfolio and Bafna's pan India reach will aid Strides' biggest brand Renerve's entry in new market segments. Strides's strong south India presence is also said to help Raricap reach a higher patient base, the company said in a statement.
Bafna's India branded generics business is engaged in sales and marketing of branded pharmaceuticals products in niche theraupetic segments i.e., haematinic, women healthcare, pediatric care in India with a presence in 17 states in India and a field force of about 400 people. It had revenues of close to Rs 25 crore for the financial year ended March 31, 2014.
Shares of Strides Arcolab on Monday closed at Rs 668.70, up 2.22% the previous close, while shares of Bafna closed at Rs 34.25 a piece, down 4.99% the previous close.