The buzz around Piramal Healthcare is growing louder by the day. The healthcare major has roped in investment bank Credit Suisse as an advisor for a likely deal, according to sources close to the development. Global pharma giants Pfizer, GlaxoSmithKline (GSK) and Sanofi Aventis are reportedly vying for the Mumbai-based company.
GSK has emerged as the front runner in the race to acquire Piramal. The British pharma major may value Piramal Healthcare at $1.5 billion against its current market capitalisation of $830 million (Rs 4,040 crore).
GSK is believed to have appointed Morgan Stanley as its investment banker. The New York offices of both Credit Suisse and Morgan Stanley will work on the deal. While Credit Suisse’s spokesman in Hong Kong declined to comment, Morgan Stanley said, “We do not comment on clients or potential clients.”
When contacted by ET, Swati Piramal, director-strategic alliances and communications, Piramal Healthcare, said the company stood by earlier denials. “We are in contact with these bankers for our various overseas acquisitions. The two shouldn’t be mixed up,” she added.
The Wall Street Journal had earlier reported that GSK and Sanofi were vying to acquire Piramal Healthcare. The company has denied this in a statement issued to stock exchanges.
Piramal Healthcare, a Rs 2,850-crore company, makes active pharmaceutical ingredients (APIs), intermediates and formulations, besides being involved in clinical research. It is the holding company for the recently-listed R&D business — Piramal Life Sciences, Piramal Glass and a proposed diagnostics foray under Piramal Diagnostics
Valuations will be key to any transaction.
“The deal is unlikely to go through at the price being offered. It probably makes sense for Sanofi to acquire Piramal Healthcare since they need to ramp up their formulation business. Acquiring Piramal’s domestic formulation business will help,” Sarabjit Kaur Nangra, vice-president, Angel Broking, said. On the other hand, GSK has a strong cash flow and is financially better placed despite recent buyouts, she added.
Foreign fund house Fidelity Investments offloaded 0.52% stake in Piramal Healthcare for Rs 20.64 crore in open market transactions on Tuesday and now holds around 3.7%. The shares of Piramal Healthcare ended at Rs 183.10 on Wednesday, down 3.66% from the previous close and almost 15% over the past week.