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Abbott gets Piramal crown jewel for Rs 17,000 crore

24 May 2010 Evaluate

US-based Abbott Laboratories is set to acquire the domestic formulations business of Piramal Healthcare Ltd for $3.72 billion (Rs. 17,000 crore) in one of Corporate India's biggest acquisition deals, but the Piramals will retain a huge chunk of the business and be rich in cash to pursue expansion and innovation.

Abbott will make an upfront payment of $2.12 billion (Rs 9,900 crore) to the Indian company. The rest will be paid in annual payments of $ 400 million over the next four years. The deal is expected to conclude in the second quarter of 2010.

The sale, which is essentially of the generics business, 350 brands and one manufacturing unit, does not involve an open offer to minority shareholders, who will instead get a special dividend. Some portion will be money received will be invested in company's other businesses while the company will also explore new sectors for investment.

Abbott, which had $30.8 billion in revenues in 2009, says the deal will give it 7 per cent market share in India, ahead of Cipla and Ranbaxy.

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