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Online medical store PharmEasy announced on June 25 that it would be acquiring 66.1 percent stake in diagnostics services chain Thyrocare Technologies Ltd for Rs 4,546 crore.
API Holdings Ltd (API), the parent company of PharmEasy, announced the "signing of definitive documents to acquire 66.1 percent stake in Thyrocare from Dr A Velumani and affiliates at a price of Rs 1,300 per share aggregating to Rs 4,546 crore", an official statement noted.
The transaction is subject to regulatory and other applicable customary approvals. Docon Technologies Pvt Ltd, a 100 percent subsidiary of API, will be the acquirer and shall make an open offer for an additional 26 percent stake.
Dr A Velumani, the founder of Thyrocare, will be separately acquiring a minority non-controlling stake, of less than 5 percent in API Holdings as part of a series of equity investments by existing and new investors of API, the statement added. CNBC TV 18 reported that the Dr Velumani would be investing Rs 1500 crore and hold 4.9 percent stake in API.
The lack of a succession plan at Thyrocare could be a key reason for Dr Velumani to sell the company at a time when valuations are rewarding, sources privy to the development had earlier told Moneycontrol.
Dr Velumani, while commenting on the acquisition deal, said it is "unique of its kind" in Indian healthcare industry. "The unique reach and strength of Thyrocare in Diagnostics blended with young and dynamic team of PharmEasy will bring in better healthcare solutions for common man nationwide," CNBC TV 18 quoted him as saying.
According to PharmEasy, the rationale of the deal is to "create one stop shop for end-to-end healthcare solutions". The company claimed to be sufficiently funded to acquire Thyrocare with present cash and commitments, and added all options are open on Thyrocare to be a listed entity post the acquisition.
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API Holdings has been reinforcing its portfolio ahead of the IPO, which is planned in 12-18 months. The acquisition of Thyrocare would beef up the portfolio. Earlier, the purchase of Medlife made PharmEasy India’s largest medicine delivery platform. Former banker Aditya Puri recently joined the board of the company to help scale up the company’s businesses.
Thyrocare listed on the stock exchanges in May 2016 with a market capitalisation of around Rs 3,300 crore on its debut. The share price has risen to around Rs 1,300/share and gained Rs 300/share in June. The share was trading at Rs 1,315, up nearly 1.4 percent at the time of publishing.
Thyrocare is a leading pan-India diagnostic chain and conducts an array of medical diagnostic tests and profiles of tests that centre on early detection and management of disease and medical disorders.
"API Holdings was advised by JM Financial and Kotak Investment Banking. Dr A Velumani was advised by Nomura."
Commenting on PharmEasy-Thyrocare deal, Vishal Kampani, Managing Director of JM Financial Group, said, "This deal brings together India’s leading digital health platform and one of the most cost-efficient diagnostics solution providers to create an unbeatable integrated digital health platform. This partnership will create tremendous opportunities and synergies for the entire ecosystem of consumers, doctors and suppliers in the Indian healthcare sector."