PI Industries plunges 8% on termination of Ind-Swift slump sale agreement

The agreement had to be cancelled due to non-completion of several pre-agreed conditions precedents by Ind-Swift Labs

Shares of PI Industries were down 8 per cent to Rs 2,756 on the BSE in Tuesday’s intra-day trade after the company terminated the agreement related to acquisition on slump sale of Ind-Swift Laboratories (ISLL). This is due to ISLL has not been able to complete several of the pre-agreed conditions precedents.

“In view of non-fulfillment and also disagreement on some of the pre-agreed conditions, the company has decided not to further pursue the transaction,” PI Industries said in a statement.

PIs’ strategy to strengthen presence in custom synthesis exports through diversification into adjacencies including pharma remains intact. The R&D establishment within PI remains attuned to developing and scaling multiple advanced technologies, processes, and platforms to execute its longterm strategy, the company said. “PI Industries will continue to evaluate other M&A opportunities that are aligned to it strategic direction with the intention to create a differentiated scale play in pharma,” it added.

On July 30, 2021, PI Industries had executed a Business Transfer Agreement (BTA) with ISLL for acquisition of their API and Intermediates business undertaking on a slump sale going concern basis for purchase consideration of Rs 1,530 crore.

At 09:54 am; the stock of PI Industries was down 6.5 per cent at Rs 2,801 on the BSE, as compared to 0.17 per cent rise in the S&P BSE Sensex. It had hit a 52-week high of Rs 3,533 on September 14, 2021.

Meanwhile, shares of ISLL were locked at the 10 per cent upper circuit at Rs 67.40 on the BSE. Till Monday, the stock had corrected 52 per cent from its 52-week high of Rs 127.35 touched on July 20, 2021.

“The Business Transfer Agreement (BTA) executed between Ind-Swift Laboratories and PI Industries dated 30 July 2021 has not been consummated till date and the Long Stop Date under the BTA has now expired. The Board of ISLL in its board meeting held today (1st November 2021) discussed the matter and has decided not to extend the Long Stop Date,” ISSL said in a statement.

PI Industries had raised qualified institutional placement (QIP) money since last two years, however delay in the allocation towards pharma venture has dragged return ratios. Since the due diligence for acquisition takes time, we expect a delay in finding out right candidate for inorganic expansion can impact return on investments in the near term, however the long term story remains intake about the development of pharma CDMO business, ICICI Securities said in a note.