Torrent Pharma explores multi-billion dollar bid for Cipla with CVC, Bain Capital

Torrent to buy stake in Cipla: Torrent Pharmaceuticals, a prominent player in the pharmaceutical industry, is in discussions with private equity firms CVC Capital Partners and Bain Capital to secure funding of up to $1.5 billion for a potential bid on Cipla, India's third-largest drugmaker by sales. This move could mark one of the largest pharmaceutical deals in India.

Notably, Cipla's founding family is interested in selling their entire 33.4 per cent holding. Any bid is likely to trigger an open offer for another 26 per cent stake, in accordance with Indian regulations. This could result in a significant deal estimated to be around $6.75 - $7 billion, as projected by Bernstein in an August 30 report.

Torrent Pharmaceuticals is anticipated to finalise its consortium financing partner in the near future. Additionally, Blackstone and Bain have also submitted non-binding bids for Cipla, underlining the high interest in this potential acquisition.

Cipla’s strong presence in the US, South Africa

Cipla is a major player in India's pharmaceutical sector, with a substantial presence in North America and South Africa, exporting medicines, and selling generic drugs for various ailments. Its product range competes with global giants like Pfizer and Abbott.

In comparison, Torrent Pharmaceuticals has a market capitalisation that is 54 per cent lower than Cipla's $11.9 billion. However, Torrent has a robust international presence, operating in over 40 countries and offering medicines across different medical segments such as diabetes, pain management, gynaecology, oncology, and anti-infective drugs.

Strategic partnership with Torrent Pharma

Foreign banks, including Barclays and Morgan Stanley, are engaged in discussions with Torrent to arrange potential debt financing for the deal. While Cipla is keen on securing a strategic partner like Torrent, they may prefer this over a purely financial investor.

Antitrust scrutiny and possible brand divestments due to high combined market shares have been flagged as potential challenges in the merger. However, the product overlap between Cipla and Torrent is seen as manageable, minimising potential obstacles in the acquisition process.

(With Reuters inputs)