Aurobindo Pharma to transfer biz in Unit-4 to arm Eugia Pharma; stock up 4%

The company said the transfer of the business undertaking will be done for a lumpsum consideration of Rs 876 crore

Shares of Aurobindo Pharma gained 4 per cent to Rs 1,003.75 on the BSE in the intra-day deal on Friday after the drug firm announced transfer of business undertaking comprised in Unit·4, on a going concern basis, to Eugia Pharma Specialities, a wholly owned subsidiary of the company. The transfer of the business undertaking will be done for a lumpsum consideration of Rs 876 crore. 

"The slump sale is proposed with the objectives of integration of Unit 4 along with other units in Eugia Pharma Specialities to improve operational synergy," Aurobindo Pharma said in an exchange filing. READ HERE

The company further added: "Due to the specialization of this business and to bring greater focus and attention, the company is carving out the unit to Eugia Pharma Specialities. The proposed slump sale will improve operational efficiency by creating a lean, competitive organisation with focus on faster decision making for expedited growth, with a dedicated management team".

The independent entity, Aurobindo Pharma said, with all injectable assets consolidated under it would enable pursuit of growth opportunities with a self-sustaining capital structure. It will provide flexibility for value creation opportunities including exploration of alliances with focused partners to enhance capabilities/growth prospects in injectables business.

Eugia is engaged in the business of research and manufacture pertaining to Oncology and hormones. The Unit 4 of the company engaged in the business of manufacture of generic injectables and Ophthalmics, accounted Rs 926.79 crore or 5.86 per cent of the total turnover of the Aurobindo Pharma for the year ended March 31, 2021 on standalone basis.

The completion of the sale is estimated in the second quarter of FY22, subject to regulatory approval. The business transfer will be effective from 1st July 2021 onwards.

Separately, the company's Board also fixed consideration at Rs 1,315 crore for the transfer of business undertaking comprised in Unit-10 to APL Healthcare, a wholly owned subsidiary of the company, by way of slump sale through a Business Transfer Agreement (BTA). In February 2021, the board had approved the aforesaid transfer of business undertaking.