WOCKHARDT has sold its nutritional business comprising top-selling brands Farex, Protinex, Dexolac and Nusobee, and manufacturing units at Lalru and Jagraon in Punjab to Abbott Laboratories for $130 million (nearly Rs 627 crore).
Ramachandran Rajamanickam, vice-president (Nutrition, Pacific, Asia and Africa) of Abbott said: “This acquisition will help us grow our business in India which we are still in the early stages of developing. The nutritional market in this country is expected to experience strong growth in the coming years.”
With the acquisition, which also includes taking Wockhardt’s fieldforce engaged in the nutritional business on its board, Abbott plans to increase its footprint from 34 cities to 67 cities, Mr Rajamanickam said. The US company hopes to gain a leading position in the nutrition market in India by 2012, he added. Abott has recently entered into the country’s fledging nutritional space. Wockhardt chairman Habil Khorakiwala was not available for comments.
"This is a win-win deal,” said an analyst with a foreign brokerage. “While the sale spells good opportunities for Abbott as it will be able to push more products from its global portfolio via the strong network of stockists that Wockhardt had, it brings in much needed cash to fund - starved Wockhardt,” he said, on condition of anonymity as he is not authorised to talk to the media.
According to a person privy to the transaction, two of Wockhardt’s brands—Farex (baby cereal) and Protinex (protin supplement)—were sold for Rs 80 crore. However, the entire break-up of the transaction could not be ascertained.
Wockhardt had in July 2006 acquired Dumex India Pvt Ltd, maker of Protinex and Farex, from the Dutch pharma giant Royal Numico NV for an undisclosed sum. The two brands in 2006 were said to have generated an annual sales of Rs 60 crore and the deal size was believed to be in the region of about Rs 100 crore. Prior to the sale, Wockhardt was the country’s second largest nutritional company.
Sources said that the price paid by Abbott for the nutrition business was 20 times of its EBIDTA. This business segment recorded sales of approximately Rs 150 crore last year. Part of the money that Wockhardt gets from this sale will be utilised to repay priority loans that the company availed under the corporate debt restructuring last month.
As part of the debt restructuring, Wockhardt last month promised its lenders that it would pay them Rs 800 crore by selling its non-core assets in a year. But, with this sale and its earlier divestment of its German subsidiary and the animal health business for around Rs 250 crore, Wockhardt managed to mobilise the required fund well before the target.
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