Fosun Pharma to acquire 74 per cent stake in Gland Pharma

In a filing on Hong Kong, S.A.R., China stock exchange, Shanghai Fosun Pharmaceutical Group said the relevant parties have entered into certain amendments to the transaction documents

Chinese pharma firm Shanghai Fosun has decided to scale down its proposed acquisition in Hyderabad-based Gland Pharma to 74 per cent stake at a valuation of not more than $1.09 billion, the company said in a regulatory filing.

Shanghai Fosun Pharmaceutical (Group) Co had earlier in July last year announced plans to acquire 86.08 per cent stake in Gland Pharma for not more than $1.26 billion.

However, the Cabinet Committee on Economic Affairs (CCEA) had raised objections to the proposal earlier this year, a development that came amid heightened tensions between India and China over border dispute.

In a filing on Hong Kong, S.A.R., China stock exchange, Shanghai Fosun Pharmaceutical Group said on September 15, 2017, the relevant parties have entered into certain amendments to the transaction documents.

As a result, "the acquisition plan was adjusted that the buyer and co-buyers shall acquire an aggregate of approximately 74 per cent equity interest in Gland Pharma in an aggregate consideration of not more than $1,091.30 million," the filing said.

This would also include a contingent consideration in the amount of not more than $25 million in relation to the Enoxaparin launch.

This is in sharp reduction to the previous agreement of "paying no more than $50 million contingent consideration for Gland Pharma’s Enoxaparin sales in the US market".

"As at the date of this announcement, the approvals of the relevant PRC authorities in respect of the acquisition have been obtained, and the US anti-trust filings and Indian anti-trust filings have been completed," Fosun Pharma said.

The termination date has been extended to October 3, 2017, it added.

"…No review and approval of the India Foreign Investment Promotion Board and the Cabinet Committee on Economic Affairs of India is required in relation to the transactions contemplated under the amendments to the transaction documents under the relevant Indian foreign investment policies," Fosun Pharma said.

When contacted, a Gland Pharma spokesperson said, "While an original agreement was entered into over a year ago, a number of approvals already obtained globally are nearing expiration and the parties have agreed to a revised shareholding agreement to complete the deal".

With an increase in the shareholding from the earlier contemplated sale, promoters Ravi Penmetsa and his father PVN Raju will continue on the board of the company.

Besides, the present management team will be in-charge of the day to day running of the company, the spokesperson said.

Under the deal, the two companies are looking at synergies, including bio-similar programme developed at Fosun being made available for manufacturing by Gland Pharma and introducing them to the Indian market.

"Furthermore, the partnership will create new channels to sell the products of Gland Pharma in markets where Fosun has an existing presence," the spokesperson said.