Buyout major KKR on Thursday said it will purchase majority stake in J B Chemicals and Pharmaceuticals from its promoters and then make an open offer to acquire 26 per cent more in the branded formulations company.
The private equity major has signed a definitive agreement to acquire stake from the Mody family at Rs 745 a share, which is over 4 per cent higher than Thursday's close of Rs 715.40, it said in a statement.
KKR has entered into a definitive agreement to purchase a "controlling stake" in the company, it said.
If one attaches the premium promised by KKR, 50 per cent equity in the company is valued at over Rs 2,860 crore, which will be the minimum amount it will be investing, excluding the open offer.
According to filings, the promoter family owns 55 per cent of the company while the rest is with the public.
"We believe J B Chemicals has an opportunity to accelerate its growth and leverage its strengths to enter into new therapeutic areas. We look forward to working with the management team to build on the company's strong foundation," KKR India Partner and CEO Sanjay Nayar said.
The deal, which comes amid a heavy hit to the Indian economy due to the COVID-19 pandemic, underscores KKR's commitment to "India's long-term economic prospects and the potential of its companies", Nayar added.
This is the third deal sealed by KKR in India in 2020, following its investments in five solar assets of Shapoorji Pallonji Infra and in Reliance Jio.
The KKR statement further said J B Chemicals is one of the leading pharmaceutical companies in India, supplying affordable, high-quality products in the cardiac, gastrointestinal and anti-infective therapeutic areas across the branded formulations market.
The company's portfolio includes four flagship brands in India -- Cilacar, Metrogyl, Nicardia and Rantac, the statement said, adding it exports to over 40 countries.
KKR will be funding the investment from its Asian Fund III, it said.
"We are thrilled that KKR - with its deep knowledge of the pharmaceutical industry and experience in investing in the sector, as well as its extensive investments in India - will take our mission forward and build on the foundation of core values that our family has instilled in this company," J B Mody, the founder, chairman and managing director of the company, said.
Avendus Capital served as the financial advisor to the company promoters, while ICICI Securities will be acting as the manager to the public offer.
In a late evening communication, ICICI Securities said that Tau Investment Holding is making an open offer to acquire 20.09 million shares of the company together with Tau Holdco Pte and KKR Asia III Fund Investments Pte.
The JB Chemicals scrip gained 1.41 per cent to close at Rs 715.40 apiece on the BSE on Thursday as against gains of 1.21 per cent on the benchmark.
