Glenmark Pharma to sell 75% stake in Glenmark Life Sciences to Nirma for Rs 5,652 crore

Glenmark Pharmaceuticals Ltd has decided to sell a 75% stake in Glenmark Life Sciences Ltd to Nirma Ltd. This deal is valued at Rs 5,652 crore, with each share priced at Rs 615. After this transaction, Glenmark Pharma will retain only 7.84% ownership in Glenmark Life Sciences Ltd. However, this deal is subject to various customary conditions, including regulatory and shareholder approvals. Nirma Limited plans to make a mandatory open offer to all public shareholders of Glenmark Life Sciences Ltd following this transaction.

Glenn Saldanha, the Chairman and Managing Director of Glenmark Pharmaceuticals Limited, expressed his satisfaction with this strategic move. He stated that this deal aligns with Glenmark’s strategy of moving up the value chain to become an innovative and brand-focused organization. The company intends to maintain its core focus on therapeutic areas such as dermatology, respiratory, and oncology. Additionally, this deal allows Glenmark Pharmaceuticals to strengthen its financial position by reducing debt and enhancing its overall returns.

One that will accelerate growth and create long-term value for stakeholders.

Yasir Rawjee, Managing Director and CEO of Glenmark Life Sciences Limited, also commented on the transaction. He sees this as a significant step in the company’s journey, one that will accelerate growth and create long-term value for stakeholders. Glenmark Life Sciences Ltd will continue to operate as an independent active pharmaceutical ingredient (API) company under Nirma Limited’s ownership. This transition provides an opportunity for the company to bolster its position in the API industry and sustain its growth trajectory.

Glenmark Pharmaceuticals emphasized its commitment to consistent growth in key markets while maintaining a strong focus on financial metrics, particularly achieving a net cash-positive balance sheet. This approach aims to create value for its shareholders. The company has been selling non-core assets to generate cash, and the deal with Nirma Limited will further contribute to achieving a net cash-positive position.

Kotak Investment Banking played a crucial role as the exclusive financial advisor to Glenmark Pharmaceuticals and Glenmark Life Sciences in facilitating this transaction. S&R Associates acted as the legal advisor to Glenmark Pharmaceuticals, while Trilegal acted as the legal advisor to Glenmark Life Sciences.

Glenmark Life Sciences Ltd, which became publicly listed in 2021, specializes in manufacturing active pharmaceutical ingredients (APIs). These APIs are essential components in drugs that deliver the desired health effects. The company serves as a supplier to pharmaceutical companies like Aurobindo Pharma and Torrent Pharmaceuticals. Furthermore, it exports APIs to various markets, including Japan, Latin America, and the Middle East.

Glenmark Pharmaceuticals has witnessed substantial growth in its share price this year, with an increase of over 95%. This outperformance contrasts with the 21.5% rise in the Nifty Pharma index. On the other hand, Glenmark Life Sciences Ltd has experienced a 49% increase in its share price, despite a 33.4% decline in the previous year (2022).

Glenmark Pharmaceuticals’ decision to sell a majority stake in Glenmark Life Sciences Ltd to Nirma Ltd represents a strategic move to refocus its business, reduce debt, and enhance shareholder value. This transaction will allow Glenmark Pharmaceuticals to maintain its core therapeutic focus while strengthening its financial position. Meanwhile, Glenmark Life Sciences Ltd will continue to operate independently in the API industry, capitalizing on growth opportunities under Nirma Limited’s ownership. The deal reflects the evolving landscape of pharmaceutical companies seeking to optimize their portfolios and create value for shareholders.

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