In what could significantly change India's pharmaceutical landscale, Torrent Pharma is likely to have entered the fray to acquire the Hamied family's stake in Cipla, according to reports.

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This development can potentially set the stage for the largest Indian pharma deal in nearly a decade.

Ahmedabad-based Torrent Pharma is looking to acquire a controlling stake in the fourth-largest domestic pharma company that drawfs its own figures. Cipla's revenue in financial year 2023 is more than double that of Torrent Pharma.

The Hamied family's stake in Cipla currently stands at 33.47 percent. Since the news of the potential sale surfaced, shares of Cipla have surged over 16 percent in a month. Calculations suggest that the promoter's stake in the company could be valued at $3.97 billion. However, with the tageover rules and open offer dynamics in play, the new potential owner may have to invest as much as $7.06 billion for a 59.47 percent stake.

However, YK Hamied, during Cipla's AGM, called any potential developments with regards to promoter stake sale as 'speculative.'

Cipla's revenue in financial year 2023 is more than double of Torrent Pharma's. However, reports suggest that Torrent Pharma is exploring avenues to form a consortium with other private equity funds to outsmart competition, which includes the likes of Blackstone and Baing PE Asia-EQT.

In case the deal does go through, the merged entity will become the second-largest pharma company in India, only behind Sun Pharma in terms of revenue. The intent, according to reports, is to present an all-cash offer, which indicates the commitment to a seamless transaction.

CNBC-TV18 is independently verifying these reports.

A compelling factor underlying this pivotal development is the intricate succession scenario within the Hamied family. YK Hamied and MK Hamied, the second-generation torchbearers of the Cipla legacy, have navigated the company through the decades. With YK Hamied not having offspring, MK Hamied's three children have played diverse roles within Cipla, albeit with varying degrees of involvement. The spotlight on succession and the impact of recent tax-related events have reportedly nudged the family toward the contemplation of a complete stake sale, marking a significant chapter in Cipla's history.

Shares of Cipla are up 2.1 percent at Rs 1,247.20, while those of Torrent Pharma are down 0.5 percent in opening.

First Published:Aug 23, 2023 9:18 AM IST