Torrent Pharma finally gets CCI nod for acquisition of JB Chemicals
New Delhi: Torrent Pharmaceuticals has received the green light from the Competition Commission of India (CCI) for its proposed Rs 19,500 crore acquisition of J.B. Chemicals & Pharmaceuticals, but with voluntary modifications to address potential concerns over market dominance.
The proposed acquisition, which relates to acquisition of shareholding by Torrent in J.B. Chemicals, followed by an amalgamation of the two companies, had earlier raised alarm bells at the CCI.
In July, Torrent sought CCI nod to acquire a majority stake in J.B. Chemicals.
Read also: Torrent Pharma seeks CCI clearance to acquire majority stake in JB Pharma in Rs 19500 crore deal
However, in response to this in mid-October, the antitrust watchdog warned that the deal could create a dominant position in critical drug segments, potentially reducing competition and harming consumers.
Specifically, the CCI expressed concerns over the market share overlap in two high-demand drug categories: Nifedipine, used for hypertension and Lactobacillus, a widely used probiotic.
Analysts indicated that in these segments, the combined market share could reach 70–90% post-merger.
To address these concerns, Torrent and J.B. Chemicals proposed a three-year price freeze on these drugs.
This clearance was sought after the Torrent Pharma announcement in June about the acquisition.
Read also: Torrent-JB Chemicals Rs 25,689 Crore Merger Under CCI Lens Over Monopoly Concerns
In June, Torrent said it will acquire 46.39 per cent stake from promoters Tau Investment Holdings Pte Ltd, an affiliate of global investment firm KKR, for about Rs 11,917 crore. It would additionally buy another 2.80 per cent from certain employees of JB Chemicals at the same acquisition price of Rs 1,600 per share (totaling Rs 719 crore).
Post this, it would make an open offer for buying 26 per cent from open market, as per listing norms, at a price of Rs 1,639.18 per share (totaling Rs 6,842.8 crore).
This will be the second biggest deal in the pharma sector ever, behind Sun Pharmaceutical Industries' 2015 acquisition of Ranbaxy Laboratories. Post share purchase, JB Pharma will merge into Torrent.
In 2020, KKR had bought a 65 per cent stake in JB Chemicals & Pharmaceuticals. In March this year, KKR divested a 5.8 per cent stake in JB Pharma for Rs 1,460 crore through open market transactions.
Read also: Torrent-JB Chemicals Rs 25,689 Crore Merger Under CCI Lens Over Monopoly Concerns
Torrent Pharma is the flagship company of the Torrent group and is inter alia engaged in the business of manufacturing and sale of pharmaceutical formulations (FDFs) across therapeutic segments.
JB Chemicals is inter alia engaged in business of manufacturing and marketing of diverse range of FDFs and Active Pharmaceutical Ingredients (APIs) and also provides Contract Development and Manufacturing Organisation (CDMO) services.
