Strides merges its Australian, Asian business with Genepharm

BANGALORE: In line with its regional market focus, Bangalore-based, mid-sized pharma player Strides Arcolab has merged its Australian and Asian businesses with Genepharm Australasia and would control 55% in the combined entity in a cash-cum-stock deal worth A$80 million or Rs 280 crore.

Once the transaction is complete, the combined entity would account for business of A$100 million and would rank in the top 10 generic pharma players in the region.

As per the arrangement, Strides will vend its Australia and Asian businesses, valued at A$65 million, into Genepharm in exchange for an issue of shares of Genepharm. Apart from this, Strides has also acquired 17.7% stake in ASX-listed Genepharm from the latter’s largest shareholder for A$15 million in cash.

Strides already has 2.1% stake in Genepharm. Strides’ stake in the merged entity would touch 55% of the expanded capital base of Genepharm.

Commenting on the deal, Strides vice-chairman and managing director Arun Kumar told ET, “We believe in a strong regional market play and see better value in smaller markets.”

Strides had, in November last year, entered into an assortment of deals with South Africa’s largest pharma generics player Aspen to unlock value of their subsidiaries. The Aspen deal infused Rs 300 crore into Strides and the company would deploy some of these funds in the Genepharm transaction.

Genepharm is a generic company in the competitive Australian market, with strong OTC market pipeline and its revenues for 2007 stood at A$55 million. Strides’ businesses in Australia and Asia, with revenue of A$32.5 million, include manufacture and distribution of pharma and OTC products in Singapore, Malaysia, Thailand, Vietnam, Hong Kong and Australia.

Both companies will also enter into a five-year Strides preferred supply agreement, under which Genepharm will have the first right of refusal to distribute all existing and future Strides’ products (except AIDS, TB and malaria) into Australia, New Zealand and Asian regions, excluding Japan and China, where Genepharm will have the non-exclusive right to supply Strides’ products. Strides will nominate two non-executive directors to the board of Genepharm.