Piramal sells health insight business to US firm for $950 million
Through the deal, the group has realized 2.3X its initial equity investment.
PEL-DRG Dutch HoldCo BV, a 100% subsidiary of PEL and holding company for DRG, has signed a definitive agreement for the sale of the insights business to Clarivate, a global leader in providing analytics with revenues of over $5 billion. The transaction includes $900 million on closing, and $50 million to be received at the end of 12 months from the date of closing. It is subject to shareholder approval, and is expected to be completed by February-end.
Piramal Group chairman Ajay Piramal told TOI, “The deal is in the best interest of shareholders, with good returns. At 5X the company’s sales of $190 million (March 2019), it was the right time we think, while creating 29% for our shareholders. This transaction demonstrates our continued commitment to create sustained long-term value for all stakeholders. Along with the ongoing equity capital-raise in PEL, this transaction not only further strengthens the company’s balance sheet, but also marks another step towards significantly unlocking value in future.”
PEL, with revenues of over $1.9 billion, majorly contributed by financial services and pharmaceuticals, sold its domestic formulations business earlier in 2010 to Abbott at an attractive valuation of 9X its sales. Later in 2014, Piramal sold his 11% stake in Vodafone India, reaping a windfall of around 52% return in two years.
Sales of Piramal Dutch IM Holdco BV (consolidated) — which includes financials of wholly owned subsidiaries PEL-DRG Dutch Holdco BV and DRG — for FY2019 were at Rs 1,331 crore. Net loss for the year stood at Rs 218 crore. The PEL scrip jumped over 5% on the BSE to Rs 1,627 by close of trade on Friday.
“With this divestment, the rights issue (Rs 3,650 crore) and Rs 1,750 crore raised through the preferential allotment to Canadian institutional investor Caisse de dépôt et placement du Québec (CDPQ), we will have around Rs 12,000 crore — enough money on our books,” he added.
DRG, the data, analytics and insights business of the group, specialises in enabling the world’s leading pharma, biotech and medical technology companies to achieve commercial success in complex health markets with the creation of effective patient-centric commercial strategies.With this acquisition, Clarivate will be well positioned in the $19-billion life sciences analytics market, which is enjoying double-digit growth, to support customers across the entire drug, device and medical technology lifecycle from research to outcome.
Clarivate Analytics executive chairman and CEO Jerre Stead said, “This milestone acquisition, which doubles the size of our life sciences business, is accretive to our 2020 earnings and sets us up as an essential, end-to-end, industry-leading data and analytics provider in the highly attractive life sciences ecosystem.”
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