Videocon set to acquire Datsons Labs for Rs 350 cr

Raises stake steadily to 19% in Apr-Mar quarter from 9% in the previous quarter

Videocon Industries is set to acquire Dr Datsons Labs Ltd (DTL) at an enterprise value of Rs 350 crore. Sources said negotiations in this regard were in advanced stages and a deal might be signed soon.

“We are in talks with a couple of merchant bankers for a possible sale. At the same time, we are also evaluating other options, including investments into the company, to meet our proposed capital expenditure plan for expansion projects. By next week, we will be finalising the name of the merchant banker for a possible stake sale,” said DTL Vice-chairman Kannan Vishwanath.

Sources said Videocon had written to Bank of Baroda to extend Rs 35 crore of credit to acquire additional stake in DTL.

Videocon Industries Chairman Venugopal Dhoot declined to comment.

Promoters hold about 40 per cent stake in DTL. In the quarter ended March, foreign portfolio investors, including Davos International Fund, Leman Diversified Fund, Stream Value Fund and Kuvera Fund, acquired 9.35 per cent in DTL from various domestic individual and institutional investors.

During the March quarter, Videocon, through its subsidiaries, had increased its stake in DTL to 19 per cent. In the previous quarter, it held nine per cent stake.

A leading broker on BSE and the National Stock Exchange said the market was abuzz with speculation of Videocon acquiring DTL.

“We are looking for capital investment at least of Rs 250 crore for our proposed expansion in Mahad and Pune. We have already applied for 17 patents of anti-cancer drugs, for which plants and machinery are already in place. With the new investments, we will commence production on these plants,” said Vishwanath. “Through fresh capital infusion, we want to ramp up our presence in developed regions,  including Europe and the US.”

DTL, a research-focused pharmaceuticals company, manufactures active pharmaceutical ingredients (APIs) and finished dosage forms and provides contract research and manufacturing services. It focuses on five niche business areas — anti-malaria, multi-therapeutic lozenges, oncology products, HIV products and codeine-based cough syrups. The market leader in the anti-malarial API segment, it is present in 61 countries.

DTL’s market capitalisation stands at Rs 121 crore. The company stock fell to Rs 38.4 at close of trade on BSE, against its previous close of Rs 45.7.