Glenmark sells API business to Nirma for $681M, wipes out debt

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Glenmark Pharmaceuticals has successfully resolved its long-standing debt issue by divesting 75% of its active pharmaceutical ingredient (API) business. The buyer, Nirma Limited, is set to acquire the majority stake for 615 Indian rupees per share, amounting to a total of Rs 5,651 crore ($681 million). Nirma, based in Ahmedabad, is known for its expertise in cosmetics, detergents, salt, and injectables.

Glenmark’s chairman and managing director, Glenn Saldanha, highlighted that the company was grappling with a gross debt of approximately Rs 4,600 crore ($555 million). He noted, “The total debt gets extinguished after the deal,” emphasizing the significant financial relief this transaction provides.

With this sale, Glenmark is strategically reshaping itself into an innovative, brand-focused company, with a primary focus on core therapeutic areas including dermatology, respiratory, and oncology.

As part of the deal, Glenmark retains a 7.8% stake in the API subsidiary, Glenmark Life Sciences. The subsidiary will continue its operations independently under the ownership of Nirma, according to GLS CEO Yasir Rawjee, Ph.D. Rawjee expressed optimism about strengthening the company’s position in the API industry and sustaining its growth trajectory.

This transaction marks the conclusion of a prolonged debt challenge for Glenmark. In 2019, the company contemplated selling the API unit to address its financial woes but ultimately chose to spin it off. In April of this year, as the debt situation persisted, Glenmark initiated the sale process, enlisting Kotak Mahindra Capital to oversee the transaction. Indian regulatory requirements mandated the sale of a portion of the API subsidiary due to Glenmark’s 82% ownership stake.

While the sale effectively eliminates Glenmark’s debt burden, it is noted that the share price was below the current market rate. The API unit, despite contributing 11% to Glenmark’s overall revenue, accounted for 20% of its operating earnings, thanks to higher profit margins. Earlier this year, Glenmark took additional measures to address its debt by selling nine dermatological brands to Eric Lifesciences for 3.4 billion rupees ($41.4 million).
Last month, Glenmark reported a significant revenue increase of 22.5%, with the API unit playing a pivotal role in achieving year-over-year growth of 18%.

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