KKR to acquire 54% stake in JB Chemicals for about $500 million

Global investment firm KKR  announced it has entered into a definitive agreement to purchase a controlling stake in JB Chemicals & Pharmaceuticals, one of the leading Indian pharma companies specialising in branded formulations. As part of the agreement, KKR will acquire its stake from the founding Mody family at a purchase price of Rs 745 per share and make an open offer for an additional 26 percent stake in the company.

The share purchase agreement has been struck for acquiring 54 percent stake, which values the transaction at around $500 million. According to the deal terms, once KKR acquires 54 percent stake, the promoter group can sell additional shares to the private equity firm but not exceeding 64.9 percent stake.

This is the third deal sealed by KKR in 2020 after the buyout of five solar assets of Shapoorji Pallonji Infra and its minority stake buy in Reliance Jio.

JB Chemicals supplies affordable, high-quality products in the cardiac, gastrointestinal and anti-infective therapeutic areas across the branded formulations market. The company’s portfolio includes four flagship brands in India: Cilacar, Metrogyl, Nicardia and Rantac.

The company currently exports its branded formulations to more than 40 countries around the world. JB Chemicals’ contract manufacturing capabilities also allow it to partner with large, international brands to develop a diverse range of innovative specialty products, including tablets, injectables, creams and ointments, lozenges, herbal liquids and capsules.

Commenting on the deal, Sanjay Nayar, Partner and CEO, KKR India, said, “JB Chemicals has an opportunity to accelerate its growth and leverage its strengths to enter into new therapeutic areas.”

In India, KKR's pharma and healthcare investments include Max Healthcare and Radiant Life Care. It has previously invested in Gland Pharma, an Indian pure-play generic injectable pharmaceutical products company.

KKR will fund this investment from Asian Fund III.

Avendus Capital served as financial advisor to the promoters of JB Chemicals, and Platinum Partners (Mumbai) acted as legal counsel. Moelis & Company served as financial advisor, EY as accounting and tax diligence advisor, and Shardul Amarchand Mangaldas & Co and Simpson Thacher & Bartlett acted as legal counsel to KKR. ICICI Securities will be acting as the manager to the public tender offer.