Natco Pharma offers to acquire 35% in Adcock Ingram for ₹2,000 crore

Expected to be closed in 4 months, deal to facilitate Indian firm's entry into Africa

In a bid to enter the African market, Natco Pharma on Wednesday announced that it has submitted a firm ZAR 4 billion (₹2,000 crore) cash offer to buy a minority stake in South Africa-based drugmaker Adcock Ingram Holdings Limited (AIHL).

 

If the move succeeds, the Hyderabad-based Natco will buy a 34.95 per cent stake in Adcock Ingram from minority stakeholders at ZAR 75 ($4.271) per share.

 

The deal will give Natco a gateway into South Africa, with AIHL boasting of a 10 per cent share of the private pharmaceutical market in the nation. It is also the largest supplier of hospital and critical-care products in South Africa.

 

This transaction would consolidate Natco’s previous 0.80 per cent stake, making it the second-largest shareholder in AIHL with 35.75 per cent, behind the Bidvest group, which holds the remaining 64.25 per cent.

 

Natco said that the estimated transaction completion time is four months, assuming there are no regulatory delays.

 

“Post-transaction, Natco will consolidate 35.75 per cent of AIHL’s net profit in its financial results in accordance with its shareholding,” the company said in a regulatory filing.

 

If the deal happens, Adcock Ingram will be delisted from the Johannesburg Stock Exchange (JSE), and will continue to operate as a private South African business.  ALSO READ: Kotak Mahindra Bank targets affluent clients with 'Solitaire' launch

 

Rajeev Nannapaneni, chief executive officer (CEO) and vice chairman of Natco Pharma, said that the proposed transaction will also allow the company to tap into new revenue streams and expand its footprint in one of the largest and growing emerging markets.

 

In return, AIHL will be aiming to leverage Natco’s research and development (R&D) strengths, regulatory expertise, and global marketing reach to support local leadership and expansion into new markets.

 

“AIHL will benefit from a partnership with a research-focused, innovative and vertically integrated pharmaceutical company, and over time, South Africans will be beneficiaries of wider access to affordable medicines,” said Andrew Hall, CEO at AIHL.

 

Valued at an estimated ZAR 11 billion ($632 million), AIHL generated revenues of ZAR 9.6 billion ($536 million) for the financial year ending in June 2024.

 

Founded in 1890, the company operates across four segments — prescription, consumer, over-the-counter (OTC), and hospitals. It has a diverse portfolio of products, ranging from generic and branded formulations to critical-care hospital products as well as consumer and home-care products.

 

The announcement was made after market hours on Wednesday, when Natco Pharma’s shares went up by 2.01 per cent, closing at ₹1,034.75 apiece on the BSE.