Latest news with #JBCP
Entrepreneur
02-07-2025
- Business
- Entrepreneur
Torrent Pharma to Acquire Controlling Stake in JB Chemicals in INR 266 Billion Deal
The acquisition involves Torrent Pharma buying a 46.39 per cent stake from global investment firm KKR and an additional 2.8 per cent from JBCP employees, both at INR 1,600 per share You're reading Entrepreneur India, an international franchise of Entrepreneur Media. Torrent Pharmaceuticals has entered into definitive agreements to acquire a controlling 49.2 per cent stake in JB Chemicals & Pharmaceuticals (JBCP) for Rs 126.4 billion. The deal, structured in phases and inclusive of a share swap for the remaining stake, places the enterprise value of JBCP at INR 266.3 billion, adjusted for FY25 net cash. The development was announced in a press release issued by Equirus Securities. The acquisition involves Torrent Pharma buying a 46.39 per cent stake from global investment firm KKR and an additional 2.8 per cent from JBCP employees, both at INR 1,600 per share. Following this, Torrent will extend a mandatory open offer to public shareholders for up to 26 per cent at INR 1,639 per share. The second phase involves merging JBCP into Torrent, offering 51 Torrent shares for every 100 JBCP shares, valuing the remaining 50.8 per cent at INR 140.4 billion. The transaction is expected to conclude within 15–16 months, subject to regulatory approvals including the Competition Commission of India, anticipated within six months. Once completed, the deal will make Torrent the fifth-largest pharma company in India by revenue. JBCP draws nearly 80 per cent of its domestic revenue from gastrointestinal and cardiac therapies. Torrent anticipates procurement and distribution efficiencies in the near term, along with field-force optimization. Longer-term revenue gains are expected from broader prescription reach, deeper penetration in international markets, and scaling of JBCP's acute, ophthalmology, and CDMO segments. The combined entity is projected to deliver margin gains of 350–400 basis points over the next three years. While the deal is likely to be earnings dilutive in the first year, Torrent expects to break even by FY27 and reach EPS accretion by FY28. Return on capital employed (ROCE) is projected to return to pre-deal levels of 28 per cent by the same year, supported by operational synergies. Equirus estimates a payback period of 14–15 years and sees the company's leverage easing within four to five years post-deal. The company remains confident about navigating regulatory hurdles, although some divestments may be necessary to satisfy antitrust requirements. This acquisition marks Torrent's strategic push to solidify its position in India while tapping into JBCP's established international footprint in the US, Russia, and South Africa, and entering new therapy areas such as ophthalmology and nephrology.
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Business Standard
30-06-2025
- Business
- Business Standard
Torrent Pharma share pops 4% on ₹25,689-cr JB Chem deal; analysts cautious
Torrent Pharmaceuticals has signed a definitive agreement to acquire a controlling stake in JB Chemicals and Pharmaceuticals (JBCP) at a fully diluted equity valuation of ₹25,689 crore. Tanmay Tiwary New Delhi Torrent Pharma share price today: Pharmaceutical company Torrent Pharmaceuticals shares were in focus on Monday, June 30, after the company announced a massive ₹25,689-crore deal to acquire JB Chemicals & Pharmaceuticals (JBCP). The Torrent Pharmaceuticals share surged as much as 3.89 per cent intraday to ₹3,474.60 apiece before paring gains. At last count, shares were trading 0.72 per cent higher at ₹3,368.35, even as the BSE Sensex remained flat around 84,003.81. The deal Torrent Pharmaceuticals has signed a definitive agreement to acquire a controlling stake in JB Chemicals and Pharmaceuticals (JBCP) at a fully diluted equity valuation of ₹25,689 crore. The transaction, structured in two phases, begins with Torrent Pharmaceuticals acquiring 46.39 per cent stake via a share purchase agreement (SPA) at ₹1,600 per share, amounting to ₹11,917 crore. This will be followed by an open offer to buy up to 26 per cent from public shareholders at ₹1,639 per share. Additionally, Torrent Pharmaceuticals said that it aims to acquire 2.8 per cent of JB Chemicals and Pharmaceuticals' equity from certain employees at the same price offered to KKR. As part of the transaction, Torrent Pharmaceuticals and JB Chemicals and Pharmaceuticals will merge—JB Chemicals shareholders will receive 51 Torrent Pharmaceuticals' shares for every 100 JB Chemicals and Pharmaceuticals shares held. The deal is now pending shareholder and Competition COmmission of India (CCI) approvals and is expected to close in six months. Brokerages' view Brokerages broadly see the deal as strategically major, though the near-term impact remains mixed. According to domestic brokerage firm Motilal Oswal, the acquisition provides Torrent Pharmaceuticals with a diversified branded portfolio that includes several potential mega brands, a pan-India reach supported by a 2,800-strong medical representative field force, robust manufacturing infrastructure for multiple dosage forms, and access to a growing Contract Development and Manufacturing Organisation (CDMO) business driven by lozenges. The brokerage believes this acquisition is value accretive over the medium to long-term. Excluding the impact of JB Chemicals and Pharmaceuticals, Torrent Pharmaceuticals is expected to post a 12 per cent revenue, 14 per cent Ebitda, and 23 per cent PAT CAGR over FY25–27. The brokerage values the stock at 38x 12-month forward earnings, arriving at a target price of ₹3,430. However, it maintained a 'Neutral' rating, citing limited upside from current levels despite the deal's long-term merits. Those at Japan-based foreign brokerage firm Nomura noted that the move aligns with Torrent Pharmaceuticals' history of inorganic growth, particularly in India. The acquisition offers near-term cost synergies and potential long-term revenue synergies, especially as both firms have a dominant presence in the Cardiac and Gastro segments. However, it flagged concerns around execution risks given the unprecedented size of this deal for Torrent. Unlike past acquisitions, valuation premiums are higher, and there's limited headroom for operational improvement as JBCP is already a well-run business with strong market share in key products. In the near-term, the acquisition could be earnings dilutive, especially when factoring in higher interest and amortisation costs. Excluding amortisation, the deal may be marginally EPS accretive—if merged using Torrent stock. Thus, Nomura maintained a 'Neutral' rating on Torrent Pharmaceuticals with a target price of ₹3,580, based on 25x FY27 Ebitda of ₹4,850 crore. The stock currently trades at 26.1x one-year forward Ebitda. While analysts are mixed on the immediate financial impact, the Street appears optimistic about Torrent Pharmaceuticals' long-term strategic play in scaling up its domestic and international presence through this acquisition.
