Aurobindo Pharma To Sell Injectables Unit To Subsidiary For Rs 876 Crore; Stock Rallies

Aurobindo Pharma Ltd. decided to sell its generic injectables and ophthalmics manufacturing unit to a wholly owned unit for Rs 876 crore.

The company's board, in its July 1 meeting, approved the slump sale to Eugia Pharma Specialities Ltd. on a cash-free basis as on March 31, 2021, according to its exchange filing. The deal value will be adjusted for any differences arising since then up to July 1.

This proposed transaction, subject to regulatory approvals in the U.S. and, Europe, is estimated to be completed by September 2022.

The generic injectables and ophthalmics unit reported a revenue of Rs 926.8 crore in FY21, contributing 5.9% of the standalone top line of Aurobindo Pharma.

At Rs 906 crore, it contributed 5.7% of the company's standalone net worth.

Eugia is engaged in research and manufacturing in oncology and hormones segments. The transaction is aimed at improving operational efficiency by brining all injectable assets under one unit.

Formulations Unit Deal Value Raised

Aurobindo Pharma also increased the amount that it will receive for transferring its oral formulations manufacturing business to another fully owned subsidiary, according to its statement.

In its Feb. 27 meet, the board proposed to transfer the business to APL Healthcare Ltd. on a slump-sale basis at Rs 1,092 crore based on financial statements as of December 2020.

On Thursday, it raised the deal value to Rs 1,315 crore after adjusting for differences since Jan. 1 to the closing date of the transaction.

Shares of Aurobindo Pharma rallied as much as 4.6% to Rs 1,013 apiece. The stock has gained over 9% year-to-date compared with the benchmark NSE Nifty 50 index's 12% rise.