Blackstone likely to buy out Hamieds stake from Cipla: Reports

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).

US-based private equity fund, Blackstone is said to be submitting a non-binding bid next week to acquire the entire 33.47% promoter stake in Cipla, The Economic Times reported.

This will formally start a process of the exit of the Hamied family who started the company in 1935, the report added.

Moneycontrol reported on July 27 that Cipla's promoters are in talks with major private equity (PE) players to sell a part of their total holding in the company. Senior Congress leader Jairam Ramesh expressed his sadness over the deal. Read here for the full story.

Blackstone's move will also trigger an open offer for an additional 26% of the company. Upon full subscription, Blackstone would will end up owning as much as 59.4% of Cipla.

The Hamied family, who promote India's third-largest pharmaceutical generics player by revenue, Cipla, collectively hold a 33.47 percent stake in the company.

The people in the know of the deal also mentioned that with the second generation promoters, YK Hamied and MK Hamied, Chairman & Vice Chairman Cipla, respectively being octogenarians and Samina Hamied, Executive Vice Chairperson, being the only member from the second generation to lead Cipla, the company needs a clear road map on succession.

“They are evaluating options for a strategic investor to come on board to revamp future strategy to enhance capital allocation and operational efficiency to improve return metrics,” according to the people aware of the matter.

“Succession issue has been a long standing concern at Cipla, the company needs a clear leadership plan. It has been often seen as a takeover candidate for this reason,” the report added.

Since the surfacing of the news, shares of Cipla has shot up over 15 percent. At 10.37 am, shares of Cipla were trading at Rs 1,215.30, up 4.2 percent on the National Stock Exchange.

Cipla reported a 45.1 percent growth in consolidated net profit to Rs 995.7 crore for the April-June quarter for FY24, as against Rs 686.38 crore clocked in the same period a year ago.  Moreover, the pharmaceutical major also raised its EBITDA margin target for the current fiscal to 23 percent from the earlier target of 22 percent.