PI Industries to acquire Ind-Swift Laboratories' API business for Rs1,530cr; Stock zooms 5%

The overall purchase consideration for the target undertaking is to be Rs1530cr on debt and cash free basis subject to closing adjustments.

Aug 02, 2021 10:08 IST India Infoline News Service

PI Industries Limited has executed a Business Transfer Agreement (BTA) with Ind-Swift Laboratories Limited (ISLL) for acquisition of their API and Intermediates business undertaking on a slump sale going concern basis.

Acquisition is in line with PI’s long-term strategic objective and aiming to create a differentiated scale play in Pharma
  • PI is known for pursuing science led opportunities and has successful track record of building unique business models by delivering innovative solutions to its customers.
  • It has been one of the leading players in Agri-sciences and CSM industry for over 7 decades and is on a strategic path of diversification and envisions the Pharma vertical as one of the key pillars for future growth.
  • It is aiming to create a differentiated position in Pharma sector by leveraging its core competencies in complex chemistry, operational excellence, technology platforms and global reach through partnership with large innovators.
  • The acquired business with revenue scale of ~Rs. 860 crore and EBIDTA margin of ~23%, access to strong customer franchise in the regulated/ROW markets / product portfolio, accredited manufacturing facilities and experienced management team will help PI to build a differentiated scale play in pharma in an expeditious manner.
PI expects to create significant value by leveraging combined capabilities and unlock synergies
  • Acquired business undertaking has diversified portfolio of 20+ products with leadership position (global top 5) in several of them and a good R&D product pipeline.
  • PI has also developed strong R&D pipeline of products and complementary technologies over last few years. With its leadership in technology and complex chemistry and strong 350+ R&D team / world class infrastructure, PI is expecting to ramp up progress on combined R&D pipeline and create a niche and differentiated portfolio. Introduction of new and cutting-edge technologies will also enable building a differentiated and sustainable relationship with global customers backed by quality and efficiency.
  • Acquired undertaking has cGMP compliant manufacturing facilities with approvals for US (USFDA), European, Japanese, Europe (EDQM), Japan (PMDA), Brazil (ANVISA), Korea (KFDA) and other markets. PI will work towards further enhancing operations excellence at the acquired undertaking by automation, improving capacity through-put, backward integration of key intermediates, etc. to capture bigger share of value chain and build self-reliance.
  • While the acquired entity has excellent global reach/ customer portfolio, enhanced focus on customer centricity and commercial excellence will allow for deepening and widening customer relationships to attain full potential.
  • Acquired undertaking also brings with it highly experienced employees /leadership team, which will be further strengthened with significant pharma industry experience sitting both at executive and board level at PI.
Following are some of the Key Highlights of the Transaction:
  • The overall purchase consideration for the target undertaking is to be INR 1530 crores on debt and cash free basis subject to closing adjustments.
  • The target undertaking is planned to be acquired through PI’s Fully owned subsidiary.
  • The purchase consideration will be paid in all-cash and funded from the proceeds of the completed Qualified Institutional Placement (QIP) and internal accruals. The transaction is expected to be earnings accretive with immediate effect.
  • The transaction includes entire API Undertaking covering 2 manufacturing plants located at Dera Bassi, Punjab and Jammu & Kashmir, R&D set up in Mohali, Punjab with strong product pipeline, customer and vendor contracts, and sales, marketing & distribution networks spanning more than 70 Countries serving more than 200+ Global Customers.
  • The consummation of the transaction and integration into corporate structure of PI is expected to be completed during Q3FY22 subject to fulfilment of customary closing conditions and regulatory approvals.
Commenting on this development, Mayank Singhal, Vice Chairman & Managing Director of PI Industries Ltd said, “Today marks a landmark occasion for PI with our Board approving this acquisition as a first significant step towards our long-term strategic move for diversification into adjacencies. As the year 2021 is also the 75th year of PI’s journey, this diversification will be a defining moment for our journey beyond.

This acquisition will pave way for building a differentiated position in pharma value chain by technology partnerships, selecting niche product portfolio, leveraging our competencies in complex chemistry, operational & commercial excellence and expanding global reach.

For our global partners, this will mark an important milestone in their relationship with PI. The combined entity will bring a gamut of demonstrated possibilities, paving the path to broader, differentiated, and sustainable partnerships.

Our aim is to build multiple growth engines and take PI to the next level in the global arena with more substantiative participation in the larger specialty & fine chemical opportunity.

I complement PI’s leadership team and external advisors who were painstakingly involved in fructifying this opportunity for last several months for successfully completing this task.”

On Sensex, at around 10:27 AM, PI Industries was trading at Rs3102.95 per piece higher by 5.24% on Sensex.

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