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Exclusive | Biocon, Mylan biosimilar deal in last leg; Serum Institute to buy additional stake of $500 million in Biocon Biologics: Sources

Adar Poonawalla’s Serum Institute is likely to buy additional stake in Biocon Biologics worth $500 million which will provide the much needed cash to Biocon to pay Mylan in a part equity, part cash deal for biosimilar business.

January 14, 2022 / 01:49 PM IST
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Biocon is in the final stage of announcing the deal to buy Mylan’s biosimilar business in a part cash, part equity merger transaction, sources with direct knowledge shared with Moneycontrol. Sources say that Adar Poonawalla’s Serum Institute could play an important role in providing cash to Biocon to acquire a controlling stake in the merged biosimilar company with Mylan.

Moneycontrol has learnt from sources that Biocon Biologics and Mylan’s biosimilar business merger is likely to create a $10 billion behemoth in equity value. As part of the deal construct, Biocon is likely to own a controlling majority and will be buying additional shares from Mylan worth $1.5 billion.

To fund the cash payout of $1.5 billion to Mylan, Biocon is in talks to sell additional stake in Biocon Biologics worth $500 million to Serum Institute and Biocon Biologics’ overseas arm is likely to tie-up debt of $1 billion, sources suggest.

Biocon, Mylan deal is purposed to achieve scale and unlock value, sources with direct knowledge tell Moneycontrol. The merged entity will look for an IPO seeking a valuation at a premium to $10 billion as part of the deal agreement, sources suggest. Deal with Biocon and proposed IPO of biosimilar business to provide the much needed cash to Mylan, now named Viatris, for its debt repayment globally.

Moneycontrol sent e-mail queries to both the companies, Biocon spokesperson said, “We would not like to comment on market rumours and speculation”  Company Spokesperson.” Mylan official spokesperson said, “We don’t comment on market rumours and speculation.” Serum Institute spokesperson said the company has no comment on Moneycontrol’s query.

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Adar Poonawalla’s Serum Institute owns 15% stake in Biocon Biologics as part of vaccine alliance announced earlier. A recent exchange filing said, “Biocon Biologics Ltd.'s board approved a merger with a new vaccine subsidiary of the Serum Institute of India. Biocon Ltd.'s arm approved allotment of 15% of the equity share capital of Biocon Biologics to the Serum Institute for merger with Covidshield Technologies Pvt.” This deal valued Biocon Biologics at $4.9 billion.

Mylan and Biocon already have a business relationship in the biosimilar business as Biocon and Mylan are exclusive partners on a broad portfolio of biosimilars and insulin analogues. For Mylan the deal may provide the much needed funds as Biocon looks to hold a controlling stake in the merged biosimilar business and may buy additional stake from Mylan as part of the deal.
Nisha Poddar is an Editor-M&A, CNBC-TV18
first published: Jan 14, 2022 01:20 pm
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