The likely Cipla stake sale plan has come across a tricky hurdle as reportedly the promoters are not aligned in view regarding the common valuation.
Differences among founders may lead to delay in deal until common consensus is reached over valuation, ET Now reported citing unnamed sources.
Cipla’s promoter group currently controls around 33% of the company’s shares. Reports have said that the family members could sell some or all of their stakes in Cipla.
ET Now said there is divergent thinking on some issues from promoter group that holds 8% in the company
A sell out would trigger an open offer for an additional 26% of the company, which means a new owner could end up owning as much as 59.4% of Cipla, overshadowing Sun Pharma’s $4 billion buyout of Ranbaxy from from Daichii in 2014.
As of mid-September, the market value of Cipla was hovering at the Rs 1 lakh crore range. At this price, the promoter stake alone was valued at Rs 33,389 crore ($4.02 billion).
Shares of Cipla were down 0.4% at 1:10 p.m. on the BSE at Rs 1,157.95 rupees apiece.
The latest development comes after Bloomberg had earlier reported that the potential sale of a stake in Cipla Ltd. is facing uncertainty as prospective buyers have expressed reluctance regarding the 1.09 trillion rupee ($13.1 billion) valuation that the founding family members are aiming for in the deal, as per sources familiar with the situation.
ET had earlier reported that Cipla was working with an advisor and was in touch with 4 to 5 large PE funds, most of whom are looking for a complete buyout of the promoter stake.
Sources said in July that promoters of pharma major Cipla are in talks with top private equity (PE) players to sell a part of their total holding in the company. An investment bank has been hired to advise on the deal, and Blackstone, Baring Asia, among others, were in talks to explore a deal.
ET had reported citing sources that Torrent Pharmaceuticals was in advanced negotiations with CVC Capital Partners to form a consortium and raise at least $1.2-$1.5 billion from the European buyout fund as the Ahmedabad-based pharma-power conglomerate puts together a Rs 60,000 crore ($7 billion) acquisition financing package, one of the largest in recent times, to acquire rival Cipla.
Founded in 1935 in Mumbai by current Non-Executive Chairman Yusuf K Hamied’s father in Mumbai, the company gained recognition by introducing affordable, generic HIV medications in Africa at the beginning of the new millennium.
Source: Economic Times