Brookfield, EQT in talks to acquire Gland Pharma from Fosun in potential $3 billion deal: Report

The company hopes Cenexi will break even by December, but rebooting operations and product lines in Europe has been challenging.

Global private equity majors Brookfield and EQT are in advanced talks to acquire a controlling stake in Hyderabad-based Gland Pharma from China’s Fosun Group, in what could be one of the biggest pharma buyouts this year, sources told The Economic Times.

The two firms have been shortlisted after an initial round of bidding, according to people familiar with the matter. Others including CVC Capital Partners and Warburg Pincus are also evaluating the deal, though no final decision has been made.

While the acquisition talks have progressed, Gland Pharma’s rising share price could prove to be a deal breaker, Economic Times reported. The company’s stock has jumped 10 percent year-to-date and 16 percent in the past month alone, closing at Rs 2,000 on Friday, giving it a market cap of nearly Rs 32,964 crore.

Fosun currently owns a 51.8 percent stake, valued at over Rs 17,141 crore ($1.9 billion). A change in control would also trigger an open offer for an additional 26 percent, potentially taking the total acquisition value to Rs 25,711 crore ($3 billion) at current prices.

However, most potential buyers believe the stock is overvalued and are only willing to consider a deal at a discount, sources told Economic Times.

“There are macro headwinds due to industry oversupply and geopolitical issues,” one of the sources said. “At this level, the process looks tough,” another industry executive added.

Fosun, a Chinese conglomerate with a broad portfolio across healthcare, asset management, hospitality, and sports, had acquired an 86 percent stake in Gland Pharma in 2016 from KKR for $1.26 billion. Over the years, it has reduced its holding through block deals, including a 6 percent stake sale for Rs 1,750 crore last year.

Fosun has faced regulatory delays and scrutiny in India, especially following India’s tightening of FDI rules for neighbours with land borders. These constraints, combined with geopolitical tensions, have pushed the group to explore a strategic exit.

Investment banks Morgan Stanley and UBS have been hired to manage the latest sale process, which had previously stalled but was revived earlier this year, Economic Times reported.

Gland Pharma, which operates as a contract development and manufacturing organization (CDMO), made headlines last year with its acquisition of French injectables firm Cenexi Group to expand its presence in Europe.

The company hopes Cenexi will break even by December, but rebooting operations and product lines in Europe has been challenging, sources told Economic Times.