Strides Arcolabs to acquire Bafna Pharma's entire branded generics portfolio

Bangalore-based Strides Arcolabs has entered into a definitive agreement to acquire a 74-per cent stake of Chennai-based Bafna Pharmaceuticals' Indian branded generics business for Rs48.1 crore.

Bafna's Indian branded generics business markets branded pharmaceuticals products in niche therapeutic segments of haematinic, women healthcare, paediatric care and includes the flagship brand 'Raricap' and seven other brands.It has a presence in 17 states in India with a field force of about 400 people and had revenue of Rs24.6 crore for the financial year ended 31 March 2014.

Bafna is a contract researcher and manufacturer and exports  branded formulation products in India and emerging markets. iTS manufacturing facilities are approved by UK-MHRA and TGA-Australia.

Strides' generics business has a strong presence  across eight states in southern and western India in multiple therapeutic categories such as CNS, cardio vascular, women's health, diabetes, pain management, vitamins, minerals and supplements.

Its flagship brand ReNerve, is the second largest brand in its segment, and enjoys undisputed leadership in the vitamins, minerals and supplements category Bafna will transfer the business as a 'going concern' on a slump sale basis to Strides and will receive a cash consideration of Rs48.1 crore and 26 per cent equity in a SPV, where Strides will hold 74 per cent.

Under the proposed transaction, Bafna will continue to manufacture and supply the products from its existing manufacturing facilities for a period of five years.

Commenting on the transaction, Mahaveer Bafna, chairman and managing director, said, ''This transaction helps Bafna de-leverage its balance-sheet and demonstrates our commitment to maximising value to our shareholders. Brand Raricap has [a] legacy of over four decades and has significant growth potential. Bafna will have 26-per cent equity shareholding in the Business and with Strides' proven track record of value creation it is expected to reap huge benefits in future.''

The transaction has been approved by the Bafna's board today and is subject to the approval of shareholders and customary closing conditions. The transaction is expected to close by end of September 2014.

KPMG Corporate Finance acted as an exclusive financial advisor and Desai & Diwanji acted as legal advisor to Bafna Pharmaceuticals Limited for this transaction.