India's biggest-ever pharma deal in the making? Torrent seeks financiers to buy Cipla promoters' stake, claims report

Ahmedabad-based Torrent Pharma is interested in buying out top shareholder Hamied family's 33.47 per cent stake in Cipla and is trying to put together financing for the purchase, a media report said, citing several people with knowledge of the matter. This would be the largest pharma sector acquisition in the country till date, the report said, adding that the acquisition would include a likely Rs 8,300 crore ($1 billion) equity infusion from one or more private equity players.

The company has reached out to several private equity firms including Advent International, Bain Capital, Warburg Pincus and CVC Capital, for a minority stake in a consortium, The Economic Times reported. Additionally, it is also in talks with foreign banks such as Standard Chartered and JP Morgan for acquisition financing, and domestic shadow banks and mutual funds in share-backed promoter financing, the report added.

Meanwhile, Torrent Pharmaceuticals on Friday said it has no information requiring disclosure under listing regulations.

Torrent said it “does not comment on speculative reports in the absence of verified data,” and that it was not in a position to comment on the movement in its share price.

"There is currently no information which requires disclosure under Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”). Considering that the shares of the Company are freely traded on the stock exchanges, the

Company will not be in a position to comment on the movement in its share price," it said in its exchange filing.

However, Torrent Pharma did not outright deny the developments either.

"If and when any proposal warranting a disclosure is considered by the board of directors of the Company, the Company shall promptly comply with the disclosure obligations under Regulation 30 of the Listing Regulations," it said.

Shares of Torrent Pharma and Cipla were down 3.1 per cent and 0.6 per cent in afternoon trading, respectively.

On August 23, ET had reported that Torrent Pharma is likely to enter the race to acquire the Hamied family's stake in Cipla.

A successful deal will take Torrent Pharma to the second-largest company by revenues in India. In domestic formulation business, it will overtake market leader Sun Pharma. Cipla's revenue in financial year 2023 is more than double that of Torrent Pharma.

The move by Torrent comes at a time when two rival bidders, Blackstone and Baring Private Equity Asia-EQT (BPEA-EQT), previously considered frontrunners, have temporarily paused their pursuit of Cipla.

Cipla's promoters, led by the Hamied family and YK Hamied, hold a 33.47 per cent stake in the company. Cipla's market value, as of now, stands at Rs 1.01 trillion. At this valuation, the promoter's stake alone is worth Rs 33,700 crore (approximately $4.07 billion), the ET report said.

If the open offer for an additional 26 per cent stake, as required under takeover rules, is fully subscribed, Torrent Pharma might pay a total of Rs 60,000 crore (around $7.2 billion) for a 59.47 per cent stake in the 88-year-old pharmaceutical company.

This would surpass Sun Pharma's $4 billion acquisition of Ranbaxy from Daiichi Sankyo in 2014.