IPCA Labs To Acquire 33.38% Stake In Unichem Laboratories For Rs 1,034 Crore

Ipca Laboratories Ltd. has entered into an agreement to acquire one-third of Unichem Laboratories Ltd.'s overall shareholding for a cash consideration of Rs 1,034.06 crore.

The company has entered into a definitive share purchase agreement for the acquisition of 2.35 crore shares from one of its promoter shareholders at a price of Rs 440 apiece, it said in an exchange filing on Monday.

The acquisition is subject to approval from the Competition Commission of India. The business and product ranges of Ipca Labs and Unichem Labs complement each other's business and product ranges.

The company will also be making an open offer to acquire up to 26% of the shares of Unichem Labs at Rs 440 apiece, aggregating to Rs 805.4 crore, according to Securities and Exchange Board of India acquisition regulations.

"This acquisition is in line with our stated strategy to enhance our portfolio in our chosen growth markets. We both are well-positioned to successfully integrate our product offerings and grow our businesses," said Premchand Godha, promoter and executive chairman, Ipca Labs.

"For Unichem, employees and customers have been core to its business, and they will benefit from Ipca's expertise in providing competitive and integrated services globally," said Prakash Mody, chairman and managing director, Unichem Labs.

IPCA Labs is expected to fund the cash consideration from the company's retained earnings. As of March 2022, the company had reserves of Rs 5,498 crore.

Mumbai-based Unichem Labs manufactures and markets pharmaceutical formulations as branded generics as well as generics in several countries across the globe, with its major markets being the U.S. and Europe. It has six wholly owned subsidiaries, which are engaged in marketing generic formulations.

Its formulation manufacturing facilities are located in Goa, Ghaziabad (Uttar Pradesh), and Baddi (Himachal Pradesh). The active pharmaceutical ingredient manufacturing facilities are located at Roha (Maharashtra), Pithampur (Madhya Pradesh), and Kolhapur (Maharashtra).

The company has a research and development facility called the "Centre of Excellence" in Goa.

For FY22, the company had total revenue of Rs 1,317 crore and operating income of Rs 119 crore. For the nine months ended December 2022, the company's revenue stood at Rs 974 crore, and it reported an operating loss of Rs 29 crore.

Prior to the announcement, shares of Ipca Labs closed 1.9% lower on Monday, as compared with a 0.67% rise in the benchmark BSE Sensex.

Shares of Unichem Labs closed 2.55% higher at Rs 386.80 apiece.