Viveat Susan Pinto / Mumbai Sep 10, 2010, 00:10 IST
The race to acquire Ahmedabad-based Paras Pharmaceuticals is growing more intense, with healthcare majors such as Piramal Healthcare throwing their hats in the ring. While Piramal confirmed its interest, sources familiar with the developments said Glaxo, Sanofi-Aventis and Abbott are also eyeing the Rs500-crore Indian firm.
Fast moving consumer goods companies such as Emami, Dabur and Marico are already in the race to acquire a controlling stake in Paras.
“The target is of interest to us,” confirmed Piramal Healthcare Group President and CFO N Santhanam, adding: “The product profile of Paras is similar to ours. There is a fit,” he said.
Like Paras, Piramal has a combination of over-the-counter and personal-care products in its portfolio, which falls under the consumer products division. This includes strong brands such as Saridon (a tablet for headaches), Lactocalamine (a lotion), Polycrol (an antacid), Supractiv (a nutritional supplement) and i-Pill (an emergency contraceptive pill) among others. i-Pill was acquired in April from Cipla for around Rs100 crore.
This division, said Santhanam, posted a turnover of Rs110 crore in the last financial year. This year, it expects to clock around Rs170 crore. “We are looking to expand this division. Acquisitions will help us do that,” he said.
Paras Pharmaceuticals Managing Director & CEO S Raghunandan couldn't be immediately reached for his comments. But sources in the know say Paras, which had a turnover of around Rs500 crore last financial year, is a good fit for those wanting to expand their portfolios or eyeing an entry into India.
Emami and Dabur are said to be strong contenders for Paras, given their similar profile of products. “Officially, Paras is not on the block yet. But once it is, we will be interested. The amount (we are willing to spend) depends on the target. But as a company, we are flexible. Also, Paras has some good brands,” Emami Group Director Harsh Agarwal said. Added Dabur India CEO Sunil Duggal: “We will consider it on merit. This is once the proposal comes to us.”
What’s also driving interest in Paras is its growth. From April to date, the maker of Moov, Krack, Set Wet, D’Cold and Ring Guard is said to be notching up a topline growth rate of about 35 per cent. Last year, it achieved 20 per cent, while the year before it declined to 8 per cent. “This is an excellent time for the investors to exit. They are making the best of it,” said the executive.
Paras is understood to have appointed Morgan Stanley as investment banker with a “sell mandate”. This follows the interest expressed by private equity investors Actis Advisors and Sequoia Capital India, who hold around 70 per cent in Paras, to exit the firm. The two are looking to offload a combined 70 per cent stake for over Rs 3,200 crore. This values the firm at over Rs 4,000 crore, which observers say is steep.
“But the point is there are no credible domestic buys available, which explains the premium the investors are placing on their stakes,” said an executive whose firm is interested in buying Paras. He requested anonymity since he is not authorised to speak with the media.
The bids will be called, said the executive, once the second-quarter results are declared next month. “It is not a listed entity, so the results will be declared internally. Once this is completed, it will be easier for Morgan Stanley to approach those interested to put in their bids. The highest bidder will walk away with the trophy,” he said.
I know the Paras Pharma brothers very closely. Mr Girishbhai, Mr Darshanbhai and Mr Devendrabhai. Mr Girishbhai, the eldest of all is a thorough finance man.Darshanbhais portfolio in Paras was R&D Media and marketing. The youngest was handling sales and distribution. While the eldest is still holding its stake of 30%, the other two have exited from Paras.Darshanbhai has launched his own FMCG company "Vini". With Mr Girishbhai and the proffessional management of Actis, they can easily clinch the deal of $750 million . Best of Luck.
Paras is growing very fast under the leadership of CEO Mr S Raghunandan.Hats off to the new management and team. I wish they get more than $750 million. They deserve it.All the very best.
The price of $750 millions is too high. I wonder how the Indian companies like Emami or Dabur with a turn over of around 3000 cr will invest the same amount for a company having a turnover of 500 crs.
Content Guide
