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INDIA BUSINESS WORLD - 1st April To 15th April - 2009
MNCS START DUE DILIGENCE TO BUY WOCKHARDT HEALTH BIZ
MULTINATIONAL pharma firms are currently doing a due diligence of Wockhardt’s animal healthcare business that has been put on the block, according to people close to the development. While it has been reliably learnt that Pfizer and Sanofi-Aventis are in the race for Wockhardt’s animal healthcare business, it couldn’t be immediately confirmed.
A Wockhardt spokesperson declined to comment.
Wockhardt plans to raise around Rs 150 crore from the sale of the animal healthcare business. The Mumbai-based drug major had approached the corporate debt restructuring cell of ICICI Bank as its debt burden has increased considerably due to forex losses.
Wockhardt has put various assets on the block to raise funds to tide over the liquidity crisis. In a letter sent to employees last week, executive chairman Habil Khorakiwala said: “We are divesting our non-core businesses. In the coming weeks, the liquidity crisis will ease and return to normalcy sooner than otherwise.”
It was earlier reported on March 6, that MNCs are in race for Wockhardt’s animal healthcare unit. UBS has been advising Wockhardt on the sale.
According to people close to the development, it would take at least three months for any firm to conclude any deal. An email sent to Pfizer did not elicit any response, while Sanofi-Aventis declined to comment on grounds that it was mere speculation. It is also believed that animal healthcare major Virbac is in the fray. However, this also could not be confirmed.
Wockhardt’s animal healthcare business recorded net sales of Rs 75 crore last year. The business is growing at 12% CAGR and about 24% EBIDTA margin. According to Mr Khorakiwala’s letter, the losses suffered by Wockhardt were due to factors such as mark-to-market and derivative losses, banks tightening their line of credit policies, impact of the global economic meltdown and the ongoing war of depreciating currencies.
Industry watchers, however, said that the sale of animal healthcare unit would not solve the company’s cash problems. Wockhardt’s debt totals Rs 3,700 crore and it runs the risk of suffering from a huge forex loss of around Rs 1,200 crore.
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