Pharma company Strides Arcolab on Thursday said it has completed the sale of its injectables business, Agila Specialties, to Mylan for $1.75 billion. The deal, struck in March, will involve a holdback of $250 million until certain regulatory conditions related to an injectables facility in India are satisfied.
The deal, which is the third-largest in the Indian pharma sector after Daiichi Sankyo?s $4.6-billion acquisition of Ranbaxy Labs in 2008 and Abbott?s $3.7-billion takeover of Piramal Healthcare in 2010, had been cleared by the Cabinet Committee on Economic Affairs in September.
Earlier this year, an Agila Specialties facility in Bangalore had received a warning letter from the United States Food and Drug Administration following an inspection.
?Consequent to the warning letter received by the company for one of its units in Bangalore, Strides has agreed to a hold back of $250 million, which will be contingent upon satisfaction of certain regulatory conditions related to the injectable facilities in India. The company expects those contingent conditions will be satisfied sometime in 2014,? Strides said in a release.
Since the initial announcement of this transaction, Strides said it now expects an additional expenditure of $150 million. This will include costs towards acquisition of additional assets from its erstwhile partners and an estimated remediation cost related to its regulatory commitments post the warning letter, it said.
?We are delighted with the conclusion of this transaction and are confident that Agila will play a significant role in Mylan?s growth strategy to become a global injectable leader,? Strides founder and group CEO Arun Kumar said. ?I am personally delighted that Mylan?s passion for its people will augur well for all the 1,800 plus employees of Strides Group who are becoming part of the Mylan family with this acquisition.?
The company said it will release the final distribution details after a board meeting on December 10. Jefferies International acted as exclusive financial advisor to Strides on the sale while Moelis & Co acted as independent financial advisor to the Board of Strides Arcolab, the release said. Herbert Smith Freehills and DSK Legal acted as the company?s legal counsels on the transaction.
