On the value of the open offer. This is likely to be near Rs. 300. Likely profit in this transaction is 10%, albeit it is a risky one.
ICICI Code: HERDRU
Mylan to buy Matrix for $736 m
Our Bureau
51.5% acquisition through deal, 20 pc through open offer |
Hyderabad , Aug 28
Mylan Laboratories of the US on Monday announced its decision to acquire up to 71.5 per cent equity in the Hyderabad-based Matrix Laboratories Ltd at Rs 306 per share, translating into an acquisition cost of $736 million (Rs 3,367 crore).
Mylan would initially purchase 51.5 per cent of Matrix's equity through an agreement with certain shareholders - the chief promoter of Matrix and its Executive Chairman, Mr N. Prasad, and private equity funds Temasek and Newbridge.
Subsequently, Mylan would make an open offer to Matrix shareholders to acquire up to an additional 20 per cent equity.
The Mylan Vice-Chairman and CEO, Mr Robert J. Coury, would assume the responsibility of non-Executive Chairman of Matrix.
Mr Prasad, who would retain a minority stake of five per cent in Matrix post-deal, would continue on the board of Matrix as non-Executive Vice-Chairman.
Further, he would invest around $25 million in Mylan and join its board of directors and the executive management team as head of global strategies.
Merrill Lynch and DSP Merrill Lynch acted as exclusive financial advisors to Mylan for the transaction.
DSP Merrill Lynch would also serve as Mylan's merchant banker for the proposed open offer.
ABN Amro and UBS Limited have acted as financial advisors to the selling shareholders of Matrix - Mr N. Prasad, Temasek and Newbridge.
Mylan would fund the transaction through its existing revolving credit facility and using cash on hand.
Temasek and Newbridge have agreed to invest a portion of their sale proceeds to purchase newly issued shares of Mylan common stock.
Newbridge has agreed to invest around $93 million, while Temasek would invest $46 million.
Following the deal, Mylan and Matrix together would have approximately 5,100 employees in 10 countries.
Matrix would provide Mylan with a significant presence in important emerging pharmaceutical markets, including India, China and Africa.
The deal would also provide Mylan with a European footprint and distribution network through Matrix's Docpharma subsidiary.
By combining Matrix's active pharmaceutical ingredient and drug development business with Mylan's expertise in finished dosage forms, the transaction would allow Mylan to capture incremental pieces of the value chain through backward vertical integration, according to a joint release from the companies.
The Mylan Vice-Chairman and CEO, Mr Robert J. Coury, said: "This is an extremely complementary transaction that accomplishes a number of Mylan's key objectives. Mylan is executing on its commitment to establish a global platform and expand its dosage forms and therapeutic categories. Additionally, this acquisition deepens Mylan's vertical integration and enhances its supply chain capabilities. The transaction will allow Mylan and Matrix to strengthen and expand their core businesses and competencies, while creating significant opportunities for global expansion and growth."
Commenting on the deal, the Matrix Executive Chairman, Mr N. Prasad, said: "Mylan, a proven industry leader, is an ideal partner for Matrix. Our strategic vision remains unchanged and we believe that this transaction creates greater growth opportunities for Matrix and its employees and also will allow us to accelerate our existing expansion plans in India and abroad."
Mylan Labs to acquire 71.5% stake in Matrix
MUMBAI: Indian drug maker Matrix Laboratories Ltd on Monday said US-based generic pharma firm Mylan Laboratories Inc will acquire upto 71.5 per cent stake in the company for around Rs 3,424 crore (736 million dollars).
Under the transaction, Mylan would purchase a 51.5 per cent stake in Matrix for Rs 306 per share pursuant to an agreement with certain selling shareholders. It would acquire shares of Matrix which are currently owned by Temasek (Mauritius) Pvt Ltd, entities controlled by Newbridge Capital (a joint venture between Texas Pacific Group and Blum Capital Partners) and Spandana Foundation.
Mylan would also purchase shares from the company's Executive Chairman N Prasad, following which Prasad would retain a 5 per cent stake in Matrix.
In addition to the above, an open offer to Matrix's remaining shareholders would be made by Mylan for acquiring upto a 20 per cent stake in the company for Rs 306 per share.
Matrix's Executive Chairman N Prasad, who will join Mylan's board and executive management team said, "Our strategic vision remains unchanged and we believe this transaction creates greater growth opportunities for Matrix and its employees and also will allow us to accelerate our existing expansion plans in India and abroad."
The deal would be funded by using Mylan's existing revolving credit facility and cash on hand. A portion of the funds received by Newbridge, Temasek and Prasad would be used to purchase newly issued shares of Mylan's common stock.
Prasad added, "Together, our companies will be able to compete more effectively, while delivering cost savings to our customers."
Nimmagadda Prasad: `Fastest wealth creator' in Indian pharma space
C.R. Sukumar
`Sharing wealth is the best way of enhancing it' |
With the latest deal with Mylan, Mr Prasad is now personally richer by around Rs 570 crore. Of this, he is investing close to Rs 115 crore back in Mylan and joining their board.
Hyderabad , Aug. 28
A capitalist by profession and a socialist in practice. That is how the latest billionaire from India, Mr Nimmagadda Prasad, likes to be known as. The 45-year-old Executive Chairman of Matrix Labs should be a `highly-satisfied' man, a day after concluding the successful deal with Mylan Laboratories Inc of US.
His dream of creating wealth, which he pursued with a relentless passion, has come true in a big way. Exhibiting high skills in the tough game of mergers and acquisitions, Mr Prasad managed to sew up the biggest acquisition deal in Indian Pharma sector as of now, for Matrix (valued at Rs 4,700 crore), with the global third largest generics major Mylan Laboratories.
Big leap
Six years is all it took the first generation entrepreneur to get into the top league of creating wealth of over $1 billion . For Matrix Labs, starting from a `meagre' $1 million this is a significant achievement in contemporary corporate history. Mr Prasad who has earned the sobriquet of a `turnaround expert' began his entrepreneurial journey when he acquired the sick pharma company Herren Drugs in May 2000.
After turning it around and renaming it Matrix Labs, he went on to acquire several other Indian and global pharma companies with a combination of M&A strategy and global business initiatives.
Modest beginning
Born into an Army officer's family in 1961, Mr Prasad holds Masters Degrees in both Science and Business Administration. He started his career in 1984 as a Management Trainee in Delhi in Indian Molasses Company (an associate of United Molasses Co, UK). He joined French multinational Rhone Poulenc Chemicals (now Sanofi-Aventis) in 1989 as Area Sales Officer at Hyderabad and was later elevated as the Regional Sales Manager.
In 1993, Mr Prasad joined Vorin Laboratories as General Manager (Marketing) and went on to become its Managing Director in 1995. When Ranbaxy acquired controlling stake in Vorin Laboratories in 1999, he was reappointed as Senior Managing Director & CEO.
His acquisitions in the domestic pharma space include Medicorp Technologies in May 2002, Vorin Laboratories in September 2002, Vera Laboratories in March 2004, Fine Drugs & Chemicals in March 2004 and a controlling stake in Concord Biotech in January 2006.
Globally, he spearheaded the acquisition of Belgium-based Docpharma NV in June 2005, controlling stake in Mchem Group of China in September 2005, floated a joint venture with Aspen Pharmacare of South Africa in September 2005 and bought 43 per cent stake in Switzerland-based Explora Laboratories SA in September 2005.
`Team effort'
Mr Prasad attributes the success of Matrix Labs to the power of collective wisdom and participative management approach. True to his belief in institutionalising the organisation, he recently relinquished the CEO position and brought in a professional CEO. He implemented his belief that `the best way to enhance knowledge and wealth is to share it' by sharing his personal wealth of 20-lakh shares worth around Rs 30 crore with his staff for their housing and children's education through the Matrix Employees Welfare Association (MEWA). With the latest deal with Mylan, Mr Prasad is now personally richer by around Rs 570 crore. Of this, he is investing close to Rs 115 crore back in Mylan and joining their board.
Recognising his contribution to the corporate world, the Indian equity research firm, Motilal Oswal Securities had adjudged him the `Fastest Wealth Creator' for the last two consecutive years, 2004 and 2005.
