<div style="float: left;">
	<img align="" alt="Limited upside for Claris shareholders" class="imgCont" height="280" src="http://bsmedia.business-standard.com/_media/bs/img/misc/2016-10/07/full/1475836302-189850.jpg" style="border: 1px solid #DDD; margin-right: 10px; padding: 1px; float: left; z-index: 0;" title="Limited upside for Claris shareholders" width="370" />
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		Claris Lifesciences&rsquo; decision to sell its injectables unit to Baxter International will leave it with $625 million or Rs 4,238 crore of cash and a 20 per cent stake in infusion business joint venture with Ostuka. Unless the company uses the cash to invest in other business from now till the deal is consummated over the next year, there will be little left in the company in terms of business revenue. The company could use the dividend or buyback or the delisting route to return the cash to shareholders if it does not deploy the cash to expand its operations.</div>
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		While the Claris-Baxter deal value is pegged at $625 million, given the $80-90 million of debt for the global injectables business and adjusting for liabilities, expenses and taxes, cash per share comes to about Rs 450, according to analysts. While there will be some gains (25 per cent at Friday&rsquo;s close) for the investor, given that the deal will close over the next few quarters, there will be uncertainty about the quantum and certainty of the payment. This is the reason the stock after gaining 20 per cent intra-day on Friday to Rs 430, ended the day at Rs 360.25, up 0.5 per cent over Thursday&rsquo;s close.</div>
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		While there is uncertainty, the company, however, did get a reasonable deal with valuations at 10 times enterprise value to operating profit and 6.25 times FY16 sales. This is comparable to deals such as the one entered between Strides and Mylan for the sale of the former&rsquo;s injectable unit. Mylan paid 6.2 times sales for the deal valued at $1.6 billion. The injectables business is expected to close the year (2016) with sales of $100 million with operating profit margins of 30-35 per cent. Claris markets its injectables in around 75 countries, and has a strong portfolio and pipeline with 11 US-approved products, more than 25 pending abbreviated new drug applications.</div>
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		While there is high demand for injectables given the entry barriers and investments required, Claris sold the business as it became difficult for it to grow the same beyond a point. It is here that companies such as Baxter which have the reach, financial muscle and research capabilities, are able to do a better job. This is why Indian companies have sold their niche injectable business to firms such as Baxter and Mylan as was the case with Strides.</div>
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		For Baxter, Claris will be a strategic addition to its existing portfolio and hospital presence across the globe. Although Baxter says that Claris will be modestly accretive to adjusted earnings in 2017, it will be increasingly accretive thereafter. Baxter sees achieving double-digit return on invested capital by the fifth year.</div>
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With major business sold and no revenue in sight, they will look to quantum of payout from deal with Baxter

Limited upside for Claris shareholders

Claris Lifesciences decision to sell its injectables unit to Baxter International will leave it with $625 million or Rs 4,238 crore of cash and a 20 per cent stake in infusion business joint venture with Ostuka. Unless the company uses the cash to invest in other business from now till the deal is consummated over the next year, there will be little left in the company in terms of business revenue. The company could use the dividend or buyback or the delisting route to return the cash to shareholders if it does not deploy the cash to expand its operations. While the Claris-Baxter deal value is pegged at $625 million, given the $80-90 million of debt for the global injectables business and adjusting for liabilities, expenses and taxes, cash per share comes to about Rs 450 a share, according to analysts. While there will be some gains (25 per cent at today's close) for the investor, given that the deal will close over the next few quarters, there will be uncertainty about the quantum and

Limited upside for Claris' shareholders

With major business sold and no revenue in sight, they will look to quantum of payout from deal with Baxter

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