Shares of Cipla opened over 2 percent higher on September 5 as reports said that private equity firm Bain Capital was in talks with Dr Reddy's Laboratories to explore a joint bid to buy out the promoter's stake in the drugmaker.
At 09.31 am, shares of Cipla were trading 1.5 percent higher at Rs 1,258 on the NSE, while those of Dr Reddy's Labs were down 0.6 percent at Rs 5,627.30.
With the possible entry of Bain Capital and Dr Reddy's in the race to buyout the promoters stake in Cipla, the competition has now intensified as bidders like Torrent Pharma and PE firm Blackstone have already placed their bids for the same.
The report by Economic Times said senior leadership from Dr Reddy's and Bain Capital met along with their advisors to discuss and formalise a strategy. If the deal with Dr Reddy's fructifies, the merged entity would become the largest pharma company not just in India, but also in the US and other emerging markets.
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In response to the news, Dr Reddy's said in an exchange filing that it does not comment on market speculations and that there is currently no such event or information which requires a disclosure.
On September 4, a media report said Torrent Pharmaceuticals was currently the frontrunner in the race, having placed a non-binding offer that’s more than 30 percent higher than PE giant Blackstone’s bid.
Meanwhile, another positive that will like play out for Cipla in today's session is the drugmaker's acquisition of South Africa based consumer health and generic medicine company, Actor Pharma. The acquisition will cost Cipla $48.6 million and will be done through its wholly-owned subsidiary in South Africa.
Also Read: Why PE firms may find Cipla acquisition a different ball game
The company has called this move as a 'strategic acquisition', highlighting its intention to capitalise on cost synergies within the South African market. Given Actor Pharma's concentration on the consumer-driven market and its upcoming product launches, Cipla anticipates a significant increase in its over-the-counter (OTC) revenue as a result of this acquisition.
"This is in line with our strategy of strengthening our OTC and wellness portfolio. We believe this is an excellent opportunity to leverage our existing marketing capabilities, unlock future growth opportunities and optimise the performance of our pipeline" said Umang Vohra, global managing director and chief executive officer at Cipla.
On September 4, shares of Cipla had settled 0.5 percent lower at Rs 1,238.85 on the National Stock Exchange.
Also Read: Cipla to acquire South Africa-based Actor Pharma
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