Cipla in advanced talks with 2 groups

livemint.com:

₹33,000 crore for its 33.47% stake and will only cede control if binding bids value the drugmaker at ₹1 trillion, according to one of the two people. “The latest discussions with Cipla promoters’ bankers regarding valuations and the premium to market price happened on Friday," said the first person, who added that Cipla’s promoters want a price of a little over ₹1,200 per share. Cipla’s shares ended trading at ₹1,180.50 on Wednesday, valuing the company at ₹95,300 crore.

Any change in promoter control will also trigger a mandatory open offer, requiring the buyer to offer to acquire as much as 26% from Cipla’s shareholders. “The total amount required for the acquisition could be at least ₹51,000 crore ($6.1 billion)," the first person said. Typically, in takeovers, the acquirer offers a premium to the promoters of the target firm and a non-compete or royalty fee.

“If the bidder offers a 10-20% premium to the market price of Cipla for giving up control, more than 26% public shareholders may tender their shares in the open offer, which would require the acquirer to bring in more funds. So, the actual size of the promoter exit deal could go up to $7 billion or more," one of the two people said. According to the people, one or two members of Cipla’s promoter family may retain about 5% of the company as non-promoter shareholders even after the proposed promoter exit.

The sale has been necessitated due to a lack of clear successors in the Hamied family to run Cipla, according to several investment bankers. While Kotak Mahindra Capital is advising as the banker for Cipla’s promoters, JPMorgan has been hired as the banker for Torrent Pharma’s promoters for the deal. A spokesperson for JPMorgan declined to comment.