Aurobindo Pharma gains on selling US unit to New Mountain Capital

Aurobindo Pharma rose 2.06% to Rs 799.15 after the company said it reached a definitive agreement to sell Natrol LLC., a wholly owned subsidiary of Aurobindo Pharma USA to an affiliate of New Mountain Capital to combine with Jarrow Formulas.

The all-cash transaction is valued at $550 million (or Rs 4,048 crore at the current exchange rate). Subject to customary closing conditions and regulatory approvals, the transaction is expected to close by January 2021. Natrol's annual sales for the 12 months ended 31 March 2020 was about $157 million. Following the acquisition of the assets of Natrol by Aurobindo Pharma in December 2014, Natrol has been a consistently profitable business, growing on all fronts under Aurobindo's ownership.

Aurobindo is committed to evaluating and concluding strategic options towards focused portfolio enhancement with the ultimate objective of enhancing stakeholder values. We are pleased to sell the Natrol business to an outstanding private equity player, who could focus additional resources to grow Natrol, its products and brands further," said Mr. N. Govindarajan, managing director, Aurobindo Pharma.

He also said Proceeds from Natrol's divestiture will be used to reduce debt and other new strategic initiatives. The announcement was made before market hours today, 26 October 2020.

The pharma company's consolidated net profit jumped 22.8% to Rs 780.68 crore on 8.9% increase in net sales to Rs 5,835.23 crore in Q1 June 2020 over Q1 June 2019.

Aurobindo Pharma is engaged in producing oral and injectable generic formulations and active pharmaceutical ingredients (APIs).

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