Mitsubishi backs Aurobindo, Intas for Teva asset bid

Teva is selling assets as part of a broader divestiture process to comply with the anti-trust regulations for its $40-bn acquisition of Allergan Plc's generics business

Japanese giant Mitsubishi UFJ Financial Group has emerged as the most prominent banker in Teva Pharmaceuticals’ asset sale in the UK and Ireland. It is backing Indian firms Aurobindo Pharma and Intas Pharmaceuticals.

The domestic firms have independently made bids of over $1 billion. Teva is selling assets as part of a broader divestiture process to comply with the anti-trust regulations for its $40.5-billion acquisition of Allergan Plc’s generics business announced last year.

Indian pharmaceutical giants are competing with global counterparts Mylan and Novartis besides private equity majors, Cinven and Apollo Global Management, to buy these assets.

“Mitsubishi UFJ has underwritten about $1.2 billion bridge-financing commitment to Aurobindo for the deal,” said a banker familiar with the bidding process of Indian companies. “The Japanese bank is also a part of the consortium supporting Intas,” he added.

Domestic lenders Axis Bank, ICICI Bank and Kotak Mahindra Bank are a part of the consortium that is backing Intas for the deal. Citigroup and HSBC are the other foreign banks which are a part of this consortium. “The deal is expected to be finalised in the next two weeks,” said another banker familiar with the process.

If successful, this would be one of the largest foreign acquisitions by the Indian pharmaceutical sector. Aurobindo’s largest ever acquisition is the $133-million buyout of US vitamin maker Natrol in 2014. Intas last year acquired the hospital supply business of Spain’s Corporacion Combino Pharm for an undisclosed amount.

Both Aurobindo and Intas have been growing their presence in Europe. Two years ago, Aurobindo entered Europe with the acquisition of the loss-making operations of Actavis in a few countries. This has been turned into a profitable business now.

Within Europe, Aurbindo focuses on markets such as France, Germany, the Netherlands, the UK, Portugal and Italy. The company has approximately 200 products under development for EU alone and expects the region to drive growth over the next three to four years. This deal will help the company consolidate its position in Europe.

For Intas Pharmaceuticals, Europe is a key market.

Intas has marketing, out-licensing and contract manufacturing arrangements for many products shipped to Europe. Last year, the Ahmedabad-based company won approval from the EU for filgrastim, a biosimilar injection, that helps bone marrow produce white blood cells in cancer patients undergoing chemotherapy. The deal will help the company take big leap in its European operations.
EXPANDING HORIZONS

• SELLER: Teva selling assets in UK and Ireland valued at over $1 billion
   
• BIDDERS:
  Indian: Aurobindo Pharma and Intas Pharmaceuticals
  Foreign: Mylan, Novartis, Cinven, Apollo Global Management
   
• SIGNIFICANCE: Largest bid by Indian pharma companies abroad