Blackstone sets its sights on buying out Hamieds from Cipla

economictimes.indiatimes.com:

Blackstone, the world’s largest private equity fund, is set to submit a non-binding bid as early as next week to acquire the entire 33.47% promoter stake in Cipla, India’s third-largest generics company by revenues, said people in the know. This will formally start a process which could see the eventual exit of the Hamied family from the company they created in 1935, and which has often been seen as a crusader against Big Pharma’s pricing strategies in emerging markets on account of its championing of affordable drugs. The move by Blackstone, if it comes about, will also trigger an open offer for an additional 26% of the company.

If fully subscribed, Blackstone can technically end up owning as much as 59.4% of the pharma major, in what would be one of the largest private equity-led buyouts in the Indian market. Cipla’s current market valuation is Rs 94,043 crore. At that price, the promoter stake alone is valued at Rs 31,476 crore ($3.80 billion).

If the open offer is fully subscribed, Blackstone may end up paying Rs 55,926 crore ($6.75 billion). There could be a significant control premium added too. The Cipla stock closed flat at Rs 1,165 on Thursday.

On July 27, CNBC TV was the first to report that Cipla promoters are exploring sale of a part of their holdings. Since its July 26 closing, the scrip is up 9%. For the moment, Blackstone is working independently, but it is expected to form a consortium with some of its limited partners (LPs).

Cipla has been working with an adviser, but only four to five large private equity funds have been approached so far. Most funds are exploring a complete buyout of the promoter stake. With an offer on the table, Blackstone is likely to be the first off the blocks, added the people