Torrent Pharma is in advanced discussions with private equity group KKR to acquire JB Chemicals and Pharmaceuticals in a deal valued at approximately Rs 20,734.61 crore ($2.4 billion), reviving negotiations that had stalled nearly 10 months ago due to valuation differences.
The transaction structure involves Torrent acquiring KKR's controlling 47.84% stake in JB Chemicals through its investment vehicle TAU Investment, followed by an open offer for an additional 26% of the company. If fully successful, Torrent could end up owning 73.84% of JB Chemicals, making this the company's largest acquisition to date.
Strategic Value and Market Position
The acquisition would significantly bolster Torrent's position in India's competitive branded generics market. JB Chemicals' portfolio includes established brands such as Nicardia for hypertension, Rantac for antiulcer treatment, Cilacar, and Metrogyl for antibacterial applications. These products maintain strong recognition among healthcare professionals, with JB's leading eight brands accounting for approximately half of the company's total sales of roughly Rs 3,900 crore.
"As far as the India market is concerned, we have reached the position today through mainly inorganic growth over the last decade," said Aman Mehta, Torrent Pharma's MD designate, in a recent interview. He emphasized the company's ambition to reach the top three position in the Indian pharmaceutical market within three to five years, stating that "acquisitions will continue to remain a priority."
Financial Performance and Turnaround Success
Under CEO Nikhil Chopra, who was brought in by KKR from Cipla, JB Pharma has demonstrated significant operational improvements. For financial year 2024-25, the company recorded revenue of Rs 3,918 crore compared to Rs 3,484 crore in FY 2023-24, representing 12% growth year-over-year.
The company has also expanded its therapeutic presence through strategic partnerships, including an alignment with Novartis to sell the new generation cardiovascular drug Izirize (inclisiran), demonstrating its deeper penetration in the cardiology market.
Financing and Market Dynamics
Torrent is conducting financing negotiations with HSBC, Standard Chartered Bank, and Barclays to arrange $1.6 billion in funding for the transaction. The same three banks were involved in financing discussions during last year's failed negotiations and are now seeking "refreshed approvals on the bond structure." The INR bond facility is being raised to fund the equity requirement and is likely to be backed by promoter group entities or select downstream cash flows.
JB Chemicals closed Friday at Rs 1,799.35 per share, up 3% from the previous day, with a current market value of Rs 28,080.46 crore. The stock has declined 4.58% year-to-date after touching a 52-week high on August 16, 2024.
Historical Context and Previous Attempts
This marks a revival of discussions that originally began last year when KKR launched a formal sale process. Torrent, along with Alkem and EQT, were in separate negotiations with KKR, but talks failed due to valuation mismatches. The negotiations are believed to have resumed bilaterally in recent weeks.
KKR originally acquired approximately 54% of JB Pharma from the founding Mody family in July 2020 for approximately Rs 3,100 crore, translating to Rs 745 per share. Earlier this March, KKR sold slightly above 5% stake in the open market via a block deal, raising Rs 1,459 crore.
CDMO Business Entry
Beyond strengthening its branded generics portfolio, the acquisition would provide Torrent with entry into the Contract Development and Manufacturing Organization (CDMO) business through JB Pharma's established alliances with multinational companies for products including cough lozenges.
Strategic Ambitions
The potential JB Chemicals acquisition represents part of Torrent's broader consolidation strategy in the Indian pharmaceutical sector. In 2023, the company pursued a $7 billion buyout of Cipla that was ultimately aborted due to differences within the promoter family. Torrent also attempted a billion-dollar acquisition of Biogaran, France's largest generics company, from Servier before the French government intervened to block the divestment.
Torrent's current market capitalization stands at Rs 1,13,184.61 crore, with the promoter Mehta family owning 68.21% of the company. A formal announcement regarding the JB Chemicals acquisition is expected in the coming weeks.
