Some members of the Hamied family that founded Cipla are set to offload shares via block deals, said people aware of the matter, eight months after promoter-stake-sale talks with Torrent Pharma collapsed. A stake of up to 2.53% will be sold for an estimated Rs 2,637 crore by MK Hamied’s wife Shirin and their daughters Samina and Rumana along with Okasa Pharma, another promoter group entity, they said. The deals are likely to happen as early as Wednesday, they said.
The move, days after the company posted its best annual results, has triggered speculation that more such transactions could be in the offing. The collapse of the $7 billion sale last year after lengthy negotiations had reportedly led to divisions within the family, according to people with knowledge of the matter.
The three persons cited above hold 4.24% of Cipla while Osaka Pharma owns a 0.02% stake. They are offering to sell up to 20.45 million shares at Rs 1,289.50-1,357.35 apiece, translating to a total deal value of about Rs 2,637 crore ($316 million). That’s a discount of 0-5% to Cipla’s closing price of Rs 1,357.35 on the NSE on Tuesday. There will be a post-sale, 90-day lock-in period, said the people cited.
The total promoter shareholding in the company was at 33.47% at the end of March.
There are three promoter family members on the Cipla board, all in non-executive capacities, led by chairman Yusuf Hamied, younger brother MK Hamied and the latter’s daughter Samina.
Samina had stepped down as executive vice chairperson in January, a move the company attributed to personal and family commitments. The company has seven independent directors, as well as MD and global CEO Umang Vora and former CFO S Radhakrishnan on the board. Yusuf and MK Hamied are octogenarians.
With the next generation not too keen on running the business and Samina operating predominantly from London, a formal sale process had been initiated in July last year. This had seen interest from PE buyout funds Blackstone, Bain, EQT and CVC as well as rivals Dr Reddy’s and Ahmedabadbased Torrent, with which talks advanced the most, as per people directly involved in the transaction. Yusuf Hamied eventually decided to pull the plug on the deal in October last year. That led to differences within the family.
Cipla didn’t respond to emails, calls and messages.
The latest move comes in the midst of a strong year for Cipla’s stock, which has surged 44.8% in the past year, significantly outperforming the benchmark BSE Sensex that has gained 17.3%. From January to now, the stock is up 8.91%. Since October 2023, Cipla has gained 14.74%.
The promoters have pared their stake before. In February 2022, Hamied family members sold 2.5% of their then 36.11% holding in block deals. At the time, the founders assured investors that they remained fully committed and invested in Cipla’s future. Last July, reports of a potential exit by the family led to a nearly 12% jump in the company’s stock price on the BSE.
Cipla posted a 79% rise in fourth-quarter profit to Rs 939 crore and a 10% increase in revenue to Rs 6,163 crore, it said May 10. It reported an ebitda margin of 24.6% in FY24, its highest ever. For the year, profit rose 47% to a record Rs 4,106 crore and sales increased 14% to Rs 25,455 crore.
At the time, the pharmaceutical company revealed its strategic intent to venture into the weight-loss segment, tapping into the growing demand for solutions to combat obesity. While Cipla is working on its own drug, the pharma major is also open to marketing US drugmaker Eli Lilly’s weightloss drugs in India. The drugmaker already has an existing partnership with the US company to sell and promote its diabetes drugs in the country.
Source: Economic Times