Strides Arcolab plunges over 15% on completion of Agila sale

NEW DELHI: Strides Arcolab shares plunged over 15% to Rs 835 after the pharmaceutical company said it has completed sale of its Agila Specialties Division to Mylan Inc for a total consideration of up to $1.75 billion.

At 3:07 pm, the stock was trading at Rs 844.20, down 141.80 points or 14.38 per cent. It hit a high of Rs 1050.00 and a low of Rs 835.00 in intraday trade.

The company, however, said it has agreed to a hold back of $250 million due to a warning letter received by it from the USFDA for one of its injectable facilities in Bangalore.

In a statement, the company said since the initial announcement of the transaction, the board of directors approved final transaction terms to include "a hold back of USD 250 million contingent upon satisfaction of certain regulatory conditions".

"The company expects those contingent conditions will be satisfied sometime in 2014," it added.

In September, the USFDA had issued a warning letter to Agila Specialties over violation of manufacturing norms in one of its plants in Bangalore following an inspection in June.

Earlier in the same month, the government had approved Mylan's deal to fully acquire Agila Specialties from Strides Arcolab. The companies had announced the deal in February.

While announcing the deal, the US-based firm had said that Agila will bring a broad product portfolio of more than 300 filings approved globally and marketed through a network covering 70 countries, including 61 abbreviated new drug applications (ANDAs) approved by the US Food and Drug Administration (USFDA).

Commenting on the completion of the transaction, Strides Acrolab Founder & Group CEO Arun Kumar said: "We are delighted with the conclusion of this transaction and are confident that Agila will play a significant role in Mylan's growth strategy to become a global injectable leader.

Post the deal, over 1,800 employees of Strides Group would become part of Mylan. Agila currently produces drugs across nine manufacturing facilities in India, Brazil and Poland, eight of which have been approved by the USFDA.

(With inputs from PTI)