The all-cash deal will give Natco Pharma a foothold in some high-growth African markets besides an opportunity to expand its product portfolio.
Rajeev Nannapaneni, chief executive officer and vice chairman of Natco Pharma, told ET that the Adcock deal is aligned with the company’s plan of expanding its presence in emerging markets. “Besides, this was within our valuation range,” he said.
Nannapaneni said the company reserves the right of first refusal in case the shareholders of Adcock Ingram plan to divest additional equity stake. The Bidwest group holds 64.25% stake in the company.
“Adcock Ingram will be delisted from the JSE (Johannesburg Stock Exchange) if the transaction proceeds,” Natco Pharma said in a statement, adding that the estimated transaction completion time is four months, assuming that there are no regulatory delays.
Nannapaneni told investors over a call that the deal is a significant step as it would have taken Natco Pharma decades to build business in Africa on its own.
Adcock Ingram has a presence across segments-prescription, OTC (over-the-counter drugs), consumer products and the hospitals business.
For the first half of FY25, Adcock Ingram recorded sales of $262 million. In FY24, its sales stood at $536 million and EBITDA at $78 million. It had a gross margin of 33.4% in FY24.
The EV/EBITDA for the Natco deal is 7.83, according to an investor presentation by Natco Pharma.
Natco Pharma said it can potentially bring significant value through its research and development programmes, dossier approvals, intellectual property sharing, experience in regulated market operations, sourcing and global marketing for the new markets in Africa and regulated markets in the region.
Over the investor call, Nannapaneni hinted at another deal under examination but refused to share any details. For FY25, Natco Pharma recorded sales of ‘4,784 crore and a profit after tax of ‘1,883 crore. The company had a cash reserve of ‘3,000 crore, of which ‘2,000 crore will be used for the Adcock deal.
