Strides Arcolab gains after pact to acquire Bafna's India branded generics business

Strides Arcolab rose 2.34% while Bafna Pharmaceuticals was locked at 5% lower circuit at 14:21 IST on BSE after both the companies entered into a definitive pact for sale of majority stake in Bafna's India branded generics business to Strides Arcolab

Shares of Strides Arcolab were up 2.34% at Rs 669.50.

Bafna Pharmaceuticals was locked at 5% lower circuit at Rs 34.25. The stock witnessed immense intraday volatility. The stock was locked at 5% upper circuit at Rs 37.85 in the intraday trade.

Meanwhile, the S&P BSE Sensex was up 109.93 points or 0.43% at 25,751.49.

Strides Arcolab (Strides) and Bafna Pharmaceuticals (Bafna) said that they have entered into a definitive pact for sale of majority stake in Bafna's India branded generics business to Strides.

Pursuant to the transaction, Bafna will transfer entire India branded generics business as a going concern on a slump sale basis to Strides and will receive a cash consideration of Rs 48.10 crore and 26% equity in a SPV, where Strides will hold 74%. Under the proposed transaction, Bafna will continue to manufacture and supply the products from its existing manufacturing facilities for a period of five years.

Commenting on the development, Mr. Arun Kumar, Founder and Group CEO of Strides Arcolab said, "This acquisition provides necessary impetus to our domestic branded generics business and the transaction is in line with our strategy to grow the company's branded business. The transaction will strengthen our reach to newer markets with a wider portfolio of products".

Commenting on the transaction, Mr. Mahaveer Bafna, Chairman and Managing Director said "This transaction helps Bafna de-leverage its balance-sheet and demonstrates our commitment to maximizing value to our shareholders. Brand Raricap has legacy of over four decades and has significant growth potential. Bafna will have 26% equity shareholding in the Business and with strides proven track record of value creation it is expected to reap huge benefits in future."

India branded generics business of Bafna is engaged in sales and marketing of branded pharmaceuticals products in niche therapeutic segments of Haematinic, women healthcare, Pediatric care in India and includes the flagship brand 'Raricap' and 7 other brands. The business has presence in 17 states in India with a field force of about 400 people and had revenue of Rs 24.60 crore for the financial year ended 31 March 2014.

The transaction is subject to the approval of shareholders and customary closing conditions. Transaction is expected to close by end of September 2014.

Bafna Pharmaceuticals reported a net loss of Rs 2.01 crore in Q4 March 2014, higher than net loss of Rs 0.66 crore in Q4 March 2013. Net sales declined 16% to Rs 39.30 crore in Q4 March 2014 over Q4 March 2013.

Bafna Pharmaceuticals, headquartered in Chennai, is into contract research and manufacturing, generic exports and marketing of branded formulation products in India and emerging markets.

Strides Arcolab reported a net loss of Rs 48.27 crore in the quarter ended 31 March 2014 as against net profit of Rs 31.57 crore in the quarter ended 31 March 2013. Net sales rose 50.2% to Rs 242.36 crore in the quarter ended 31 March 2014 over the quarter ended 31 March 2013.

Strides Arcolab is a global pharmaceutical company headquartered in Bangalore that develops and manufactures a wide range of IP-led niche pharmaceutical products. The company has 5 manufacturing facilities present in more than 75 countries in developed and emerging markets.

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