BEIJING/MUMBAI: Shanghai Fosun Pharmaceutical Group is trimming the size of the stake it will buy in India’s Gland Pharma to 74 per cent for $1.1 billion (£809 million), in a bid to salvage the stalled deal that would be the biggest takeover by a Chinese firm in India.
Fosun Pharma had struck a deal in July last year to buy an 86 per cent stake valued at about $1.26 billion in the Indian generic injectable drugmaker, but the deal had raised concerns among some in the Indian government.
India allows foreign investment of up to 100 per cent in its pharmaceutical sector but above 74 per cent requires government approval.
Two sources with knowledge of the matter said that the Chinese drugmaker had agreed to lower the stake it planned to acquire in Gland to 74 per cent, mainly because it sought to get the deal completed more smoothly and faster. Gland is backed by private equity firm KKR & Co LP.
Fosun said the deal no longer required a nod from India’s Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi. It said it had already received approval from Chinese regulators and applied for antitrust approval in the United States and India.
The Chinese drugmaker added that Gland Pharma’s founding family wanted to retain a bigger holding in the Indian company because of its good performance.
Gland managing director Ravi Penmetsa said some approvals the original deal had received were at risk of expiring. “Now with this new agreement, we won’t have to reapply for those,” he said, adding that he expects the deal to be completed in two weeks. — Reuters
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