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Torrent to acquire 46.39% stake in JB Chemicals from KKR

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Deal values JB Pharma at $3.01 billion on fully diluted

basis

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Merger aims to strengthen Torrent's presence in India

(Adds details of KKR investment in paragraphs 15-17 and changes

media packaging identifier from previous TORRENT

PHARMS-M&A/JBCPL)

By Abu Sultan and Mrinmay Dey

June 29 (Reuters) - India's Torrent Pharmaceuticals

said on Sunday it will acquire a 46.39% controlling

stake in smaller peer JB Chemicals and Pharmaceuticals

from New York-based investment firm KKR, and plans to

merge the two drugmakers.

The transaction, announced in a joint statement released by

the three companies, implies a total equity valuation of 256.89

billion rupees ($3.01 billion) for JB Pharma on a fully diluted

basis.

"This strategic alignment furthers our goal of strengthening

our presence in the Indian pharma market, and building a larger

diversified global presence," Torrent Executive Chairman Samir

Mehta said in the statement.

Under the terms of the deal, Torrent will initially acquire

an equity stake in JB Pharma from KKR for 119.17 billion rupees.

Following this, Torrent will launch a mandatory open offer

to acquire up to an additional 26% of JB Pharma shares from

public shareholders at 1,639.18 rupees per share.

Torrent also signaled its intent to acquire up to 2.80% of

equity shares from certain JB Pharma employees, the company

said.

The second phase of the transaction involves a merger of

Torrent and JB Pharma through a scheme of arrangement. Upon

merger, JB Pharma shareholders will receive 51 Torrent shares

for every 100 JB Pharma shares held.

KKR also confirmed the deal in a separate statement.

"We are confident that the combined strengths of our

organisations will unlock greater opportunities to enhance

healthcare access across our markets," said JB Pharma CEO Nikhil

Chopra.

India is Torrent's biggest market by revenue, where it

competes with peers such as Mankind Pharma.

Torrent offers drugs used to treat cancer, infections and

diabetes, and has benefited from steady demand for its specialty

and chronic illness drugs.

For the January-March quarter, its consolidated net profit

was up 11% from a year earlier.

JB Chemicals and Pharmaceuticals, meanwhile, reported higher

fourth-quarter profit in May.

Along with the steady market for its gastrointestinal

medicines, Metrogyl and Sporlac, the company also benefited from

demand for its drugs that treat chronic conditions such as

hypertension.

KKR's sale of its controlling stake in JB Pharma has reaped

five times its initial investment in the company on a local

currency basis, which translates to a 36% gross internal rate of

return, said a person with knowledge of the transaction, who

declined to be named as the information was not public.

KKR bought a controlling stake in JB Pharma in 2020 at 745

rupees a share, it said at the time.

The firm declined to comment.

($1 = 85.4400 Indian rupees)

(Reporting by Abu Sultan and Mrinmay Dey in Bengaluru, and Kane

Wu in Hong Kong; Editing by Joe Bavier and Muralikumar

Anantharaman)