Dr Reddy's completes acquisition of Wockhardt's select business divisions
Jun 10, 2020
Hyderabad (Telangana) [India], June 10 : Dr Reddy's Laboratories said on Wednesday it has completed the acquisition of select divisions of Wockhardt Ltd's branded generics business in India and a few other international territories of Nepal, Sri Lanka, Bhutan and Maldives.
The business comprises a portfolio of 62 brands in multiple therapy areas such as respiratory, neurology, VMS, dermatology, gastroenterology, pain and vaccines.
They will transfer to Dr Reddy's along with related sales and marketing teams besides the manufacturing plant located at Baddi in Himachal Pradesh with all plant employees.
On February 12, Dr Reddy's signed a business transfer agreement with Wockhardt to acquire these business undertakings for an upfront consideration of Rs 1,850 crore.
In view of the COVID-19 pandemic and consequent government restrictions, there has been a reduction in the revenue from the sales of the products during March and April.
Subsequently, through an amendment to the business transfer agreement, Dr Reddy's and Wockhardt have agreed that an amount of Rs 1,483 crore will be paid on the date of closing.
An amount of Rs 67 crore will be deposited in an escrow account and released subject to adjustments for net working capital, employee liabilities besides certain other contractual and statutory liabilities.
Besides, an amount of Rs 300 crore (holdback amount) will be released if the revenue from sales during the 12 months post-closing exceeds Rs 480 crore. Dr Reddy's will be required to pay to Wockhardt an amount equal to two times the amount by which the revenue exceeds Rs 480 crore, subject to the maximum of holdback amount.
"This deal is in line with our strategic focus on India and has paved a path for accelerated growth and leadership in the domestic market," said Dr Reddy's Co-Chairman and Managing Director G V Prasad.
"We believe that the acquired portfolio offers good growth potential for us," he said in a statement.
