Novartis India shares hits 20% upper circuit on ChrysCapital buyout

Novartis India

• Novartis AG to sell 70.68 percent stake in Novartis India
• Shares surged over 17 percent after stake sale announcement
• ChrysCapital-led consortium to become new promoter

Did our AI summary help?

Shares of Novartis India Ltd surged to hit 20% upper circuit on Friday after its Swiss parent agreed to sell a controlling stake in the company to a consortium led by ChrysCapital. The stock closed trading 20% higher at Rs 996.5, extending gains after the announcement that Novartis AG will sell its 70.68 percent stake in the Indian unit.

Earlier on Thursday, shares of Novartis India had closed 2.25 percent lower at Rs 830.45, ahead of the disclosure. At current levels, the company’s market capitalisation stands at around Rs 2,375 crore. The stock has gained 16.5 percent over the past one year, including Friday’s rally. Novartis India has a dividend yield of 2.61 percent and trades at a TTM PE of 24.33, according to exchange data.

In a stock exchange filing, Novartis India said its promoter has entered into a share purchase agreement (SPA) to sell 1.74 crore fully paid-up equity shares to a consortium comprising WaveRise Investments Limited, ChrysCapital Fund X and Two Infinity Partners. As per the disclosed transaction structure, one acquirer will acquire 56.45 percent of the equity share capital at Rs 860.64 per share, while two other consortium entities will acquire 10.32 percent and 3.91 percent, respectively, at Rs 701.25 per share.

Following completion of the transaction, the acquirers will assume control and be classified as the new promoters, while Novartis AG will cease to be the promoter of the company.

As required under Sebi regulations, the acquirers will make a mandatory open offer at Rs 860.64 per share to eligible public shareholders. The open offer will be managed by Axis Capital, according to exchange disclosures. However, at Rs 974, Novartis India stock was trading well above the open offer price, implying a premium of around 13 percent.

The company also said it will change its name to remove references to the Novartis group within 120 days of deal completion, subject to receipt of necessary regulatory approvals. ChrysCapital will also have the right to nominate certain individuals to the board of directors post consummation of the transaction.

Novartis India has a portfolio of products across chronic therapy segments such as diabetes, neurology, cardiology and dermatology, with painkiller Voveran among its key brands. For FY24-25, the company reported revenue of Rs 356.27 crore and net profit of Rs 100.90 crore.