Glenmark Pharma to sell 75% stake in Glenmark Life Sciences to Nirma for Rs 5,652 crore

Drugmaker Glenmark Pharmaceuticals Ltd said on Thursday it would sell a 75% stake in Glenmark Life Sciences Ltd to Nirma Ltd for Rs 5,652 crore at Rs 615 per share.

Glenmark Pharma will own 7.84% in GLS after the divestment. The transaction is subject to customary conditions precedent, including receipt of regulatory and shareholder approvals.

Pursuant to the transaction, Nirma Limited will make a mandatory open offer to all public shareholders of GLS.

Commenting on the divestment, Glenn Saldanha, Chairman and Managing Director, Glenmark Pharmaceuticals Limitedsaid, "We are pleased to announce this strategic transaction with Nirma, which marks a significant milestone in shaping an independent growth trajectory for GLS. This deal aligns with Glenmark’s strategic intent of moving up the value chain to become an innovative/brand led organisation, with continuous focus on our core therapeutic areas of dermatology, respiratory and oncology. It also presents an opportunity for us to strengthenshareholder value through deleveraging and enhancing our overall return profile.”

Speaking on the announcement Yasir Rawjee, Managing Director and CEO, Glenmark Life Sciences Limited said, “Today’s announcement marks the next step in the journey of the company, one that will accelerate growth and help create more value for our stakeholders in the long term. We will continue to operate as an independent API company under the new ownership of Nirma Limited. I see this as an opportunity to further strengthen our position in the API industry and continue the growth trajectory.”

Glenmark Pharma will continue to focus on consistent growth across its key markets whilst having a strong emphasis on return ratios with net cash positive balance sheet, ultimately creating value for its shareholders, said the company in a stock exchange filing.

Kotak Investment Banking acted as the exclusive financial advisor to Glenmark Pharma and GLS on this transaction. S&R Associates acted as legal advisor to Glenmark Pharma and Trilegal acted as legal advisor to GLS.

GLS, which got listed in 2021, manufactures active pharmaceutical ingredients (APIs) - key biologically active elements in a drug that are responsible for delivering desired health effects.

It counts drugmakers such as Aurobindo Pharma and Torrent Pharmaceuticals as clients and also exports APIs to markets, including Japan, Latin America and the Middle East. Glenmark Pharma, which has been selling non-core assets to generate cash, said the company will be net cash positive after the deal.

Glenmark Pharma's shares have risen more than 95% so far this year, outperforming a 21.5% rise in the Nifty Pharma index, while GLS is up 49% versus a 33.4% fall in 2022.