Cipla rises 2% amid buzz over Bain Capital, Dr Reddy’s joint bid for promoter stake

Shares of Cipla opened over 2 percent higher on September 5 as reports said that private equity firm Bain Capital was in talks with Dr Reddy`s Laboratories to explore a joint bid to buy out the promoter’s stake in the drugmaker.
At 09.31 am, shares of Cipla were trading 1.5 percent higher at Rs 1,258 on the NSE, while those of Dr Reddy’s Labs were down 0.6 percent at Rs 5,627.30.
With the possible entry of Bain Capital and Dr Reddy’s in the race to buyout the promoters stake in Cipla, the competition has now intensified as bidders like Torrent Pharma and PE firm Blackstone have already placed their bids for the same.
The report by Economic Times said senior leadership from Dr Reddy’s and Bain Capital met along with their advisors to discuss and formalise a strategy. If the deal with Dr Reddy’s fructifies, the merged entity would become the largest pharma company not just in India, but also in the US and other emerging markets. In response to this news, Dr. Reddy’s said in an exchange filing that he does not comment on speculative activity in the market and that there are currently no facts or information to disclose.
On September 4, an article said that Torrent Pharmaceuticals is currently leading the race, making a non-binding offer 30% higher than that of PE giant Blackstone.
Meanwhile, another positive that could benefit Cipla in today’s trading is the pharmaceutical manufacturer’s acquisition of South African generic drugs and consumer healthcare, Actor Pharma. The acquisition will cost Cipla $48.6 million and will be completed through Cipla’s wholly-owned subsidiary in South Africa. The company calls the move a “strategic acquisition”, emphasizing its intention to capitalize on cost synergies in the South African market. With Actor Pharma focusing on the consumer-driven market and upcoming products, Cipla expects over-the-counter (OTC) sales to grow significantly following this acquisition.
“This is part of our strategy to strengthen our OTC and healthcare portfolio. We believe this is a great opportunity to leverage our continued reach,” said Umang Vohra, Global CEO. our existing market, opening up future growth opportunities and ‘optimizing the performance of our system'”. and the CEO of Cipla.
By September 4, Cipla’s shares were steady down 0.5% at Rs 1,238.85 on the National Stock Exchange.