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Fosun to acquire Gland Pharma, with smaller stake

Fosun to acquire Gland Pharma, with smaller stake”

Shanghai Fosun Pharmaceutical Group Co (上海復星醫藥集團) scaled back its proposed purchase of control in Indian drugmaker Gland Pharma Ltd to a level that would allow it to avoid a government review of the biggest Chinese acquisition in India.

Under rules introduced this year, any foreign investor that wants to buy an Indian drug manufacturer needs to seek Government approval if it plans to buy more that 74% of the target company's shares.

Shanghai Fosun Pharmaceutical Group (600196.SS) is trimming the size of the stake it will buy in India's Gland Pharma to 74 percent for $1.1 billion, in a bid to salvage the stalled deal that would be the biggest takeover by a Chinese firm in India.

Fosun struck a deal in July previous year to buy an 86% stake valued at $1.26 billion in the Indian drugmaker, which specializes in generic injectables, but Bloomberg earlier reported that the deal was poised to be rejected by CCEA.

Fosun did not mention regulatory hurdles in its statement to the stock exchange, noting only that Gland Pharma's founding family wanted to retain a bigger holding in the Indian company because of its good performance.

"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", Gland Pharma said on Sunday.

"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.

Fosun Pharma shares yesterday jumped as much as 4.3 percent in Shanghai.

The company also said it would pay no more than US$25 million for the Indian firm's prototype sales of Enoxaparin in the United States, cutting the previously proposed amount by half.

The deal gives the Chinese firm access to Gland's stable of generic injectable medicines and control of facilities to export to the U.S. and other developed markets. Instead of the $ 1.26 billion earlier for an 86 per cent stake that Fosun Pharma was hoping to take in Gland Pharma, it is now down to $ 1.09 billion for a 74 per cent stake.

Penmetsa and his father, P.V.N. Raju, will remain on the Gland board and the current management team will continue to run the company.

The deal faced Indian regulator scrutiny as tensions between Indian and China have escalated amid a renewed spat over territory in a remote area of the Himalayas, one of the most serious flareups since a border war in 1962. 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 USA market".



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