Will Piramal Acquire Ind-Swift’s Business?
DSIJ Intelligence / 04 Sep 2012
Many media reports are suggesting that Piramal healthcare will buy Ind-Swift Laboratories’ CRAMs business. Both the companies today came with clarification that it is speculative news and there is no discussion in progress about the same. However, Ind-Swift has said that it is looking for investors as per one of its AGMs held in 2011. On the back of this, investors may be forced to ask if Ind-Swift will really sell its business to Piramal.
According to news sources, the deal will cover Ind-Swift’s CRAMs business and many of its USFDA approved facilities and that the deal could be worth Rs 1000 crore to Rs 1200 crore.
From one of the filings to the stock exchange dated 7/16/2012, what we understand is that Ind-Swift may be reporting to the corporate debt restructuring cell through SBI. As per its FY12 results, Ind-swift had a total of Rs 2218 crore in borrowings of which Rs 711 core is termed as long term borrowings, Rs 301 as short term borrowings and Rs 254 crore as trade payables. In the year FY12, the company made total sales of Rs 1338 crore and a net profit of Rs 86 crore. For the June quarter however the company reported a loss of Rs 43 crore due to adverse raw material product fluctuations. The CRAMs business is the key business of Ind-Swift and it is not clear why it would sell it.
Piramal Healthcare on the other hand has a huge cash pile of Rs 11000 crore. After it sold its domestic formulations business to Abbott Laboratories in 2010 for Rs 17,000 crore, it is looking to find new investment opportunities. Recently it acquired U.S. based pharmaceutical information company Decision Resources Group for Rs 3400 crore. Besides it also has a 10.97 per cent stake in Vodafone amounting to Rs 5864 crore.
As Piramal is keen to employ its cash pile, Ind-swift is also looking for suitable investors. We believe that the buyer-seller trade matches here and we may see speculations turning into reality. Shares of Piramal healthcare were up 2 per cent while that of Ind-Swift were up 10.73 per cent by closing today.
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