Aurobindo Pharma Sells U.S. Subsidiary For $52 Million Plus Lease Payments

Aurobindo Pharma Ltd. sold its U.S.-based, wholly owned step-down subsidiary, Eugia U.S. Manufacturing LLC, on Feb. 4.

The company said it "has entered into an asset purchase agreement with Empower Clinic Services New Jersey, LLC, to dispose of its business assets as a going concern with related assets and liabilities and employees," according to an exchange filing.

For this sale, the company will receive a cash consideration of $52 million, or around Rs 432 crore, and $58 million, or around Rs 482 crore, in lease payments that will be made to Eugia U.S. Manufacturing LLC and/or its affiliates over the 20-year lease term, including extensions.

The sale transaction is expected to close within 90 days of Feb. 4 and is subject to certain conditions.

Eugia US Manufacturing LLC currently does not contribute to the overall consolidated revenue of Aurobindo Pharma and is a loss-making entity according to FY23 financial data.

On Friday, Feb. 2, the company said that the U.S. FDA had inspected Unit-III, a formulation manufacturing facility, of Eugia Pharma Specialities Ltd.—a wholly-owned subsidiary of the company—at Pashamylaram, Telangana, which was closed with nine observations.

Shares of the company were trading 1.56% lower at 9:38 am at Rs 1,049.75 apiece, compared to the 0.06% rise in the benchmark Sensex.