GERMAN MAJOR FRESENIUS KABI PICKS UP 73% IN DABUR PHARMA, BURMANS EXIT PHARMA BIZ, GET RS 775 CR FOR 65% STAKE

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German major Fresenius Kabi has acquired 73% stake in India’s largest anti-cancer drug maker Dabur Pharma for around Rs 872 crore. With this, the Burman family, the promoters of the company and holding 65% stake, exits the pharmaceutical business.

The German company bought the stake through its Singapore subsidiary Fresenius Kabi Pte at Rs 76.27 per share, i.e. a 10.2% premium over Dabur Pharma’s current share price of Rs 69.15 at the Bombay Stock Exchange (BSE). The deal values Dabur Pharma company at Rs 1,185 crore. Fresenius Kabi is a 100% subsidiary of the $12-billion healthcare major Fresenius SE.

In a release to the BSE, Dabur Pharma said, “The promoters and certain other shareholders of the company have executed share purchase agreements with Fresenius Kabi (Singapore) Pte pursuant to which Fresenius will acquire approximately 73.27% of the total issued and paid-up equity share capital of the company at Rs 76.50 per equity share.” The deal is subject to regulatory and shareholders’ approval. 

The Burman family will get Rs 775 crore from the deal. Although it is not known who else has exited the company, it is expected that International Finance Corporation (IFC), which holds 7% stake, has also sold its stake.

To industry observers, Dabur Pharma’s move is to focus on its core competence. “Though oncology is a lucrative segment, it requires high-level research and development (R&D) to treat the serious diseases that will entail deep investment. The promoters may not want to invest in the business when the parent company is buying brands and aggressively expanding its FMCG business,” pharma analyst with KPMG Hitesh Gajaria said.

In the past, Dabur Pharma had taken strategic steps to focus on niche business divisions. In 2007, the company sold its nononcology business to Alembic for Rs 159 crore to focus on its oncology segment. In 2003, Dabur had demerged its pharmaceutical division from the FMCG business.

For the third quarter ended December 2007, the company recorded net profit of Rs 8.26 crore, marginally down from Rs 8.9 crore a year ago. The company’s unit in Baddi completed its 10-year tax exemption benefit during the quarter ended December 2007.

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