Shasun to buy out Rhodia unit

Acquisition in line with firm's global ambitions.

The Chennai-based Shasun Chemicals and Drugs, a specialised manufacturer of active pharmaceutical ingredients (APIs), has signed a letter of intent with the Rhodia group of France to acquire the pharmaceutical customs synthesis business of Rhodia Pharma Solutions (RPS).

S Vimal Kumar, joint managing director, Shasun Chemicals, told Business Standard, "We cannot disclose the cost of acquiring Rhodia Pharma Solutions as the memorandum of understanding is yet to be signed and due diligence will take time."

In a press release, Shasun Chief Executive Officer N Govindarajan said, "The proposed acquisition is in line with Shasun's strategy for enhancing its global presence in the APIs, custom synthesis and contract manufacturing."

Jean-Pierre Clamadieu, CEO of the Rhodia group, said, "The transfer of the business to Shasun will allow these activities to be pursued under optimum conditions for our customers."

On the structure of acquiring the loss-making business of RPS, Kumar said Shasun is contemplating an all-cash deal. Shasun expects to fund the acquisition through a combination of equity and debt, he added.

Both the companies expect the final sale and purchase agreement to be completed before March-end, subject to satisfactory due diligence and regulatory approvals.

According to a press statement, the proposed transaction includes manufacturing sites at Dudley and Annan in the UK, and all of RPS' development and custom manufacturing services catering to innovator and emerging pharmaceutical clients in the US, Europe and Asia.

Shasun, which will take in 400 RPS employees, will operate both the manufacturing plants in the UK to have the combined strength of the east and the west, Kumar added. However, he declined to give information on the turnover of RPS and its employee base.

Technologies like hydrolytic kinetic resolution, aromatic bond formation and radical trifluoromethylation with patents are part of this deal. All products and building blocks related to these technologies are also part of the deal.

Shasun shares today closed at Rs 102.55 on the BSE, up Rs 1.05 from yesterday's close.

The share price of the company moved up with trading volumes more than doubling to 13.26 lakh shares on Wednesday on speculation of its buying an overseas firm. Delivery volumes rose 80 per cent to 6.62 lakh shares on January 4, from 3.68 lakh shares on December 3.

In May last year, the US-based Codexis Inc and Shasun Chemicals had signed a manufacturing and supply agreement for a pharmaceutical intermediate for a generic drug. The process for the product was developed using Codexis' biocatalytic technology platform.