KKR to acquire controlling stake in JB Chemicals for Rs 3,750 crore

The total deal size thus will be around $500 mn or around Rs 3,750 crore

Global investment firm KKR & Co. Inc. will pick up a controlling stake in Mumbai-based branded formulation player JB Chemicals and Pharmaceuticals (JB Chemicals).

As part of the deal, KKR will acquire stake from the founding Mody family at Rs 745 per share (or 5 per cent premium to the closing price of Rs 715 on the BSE).

According to a BSE notification, KKR has entered into an agreement to acquire 41.7 million equity shares of JB Chemicals, representing 54 per cent,  from the promoters of the company, said a company statement on Thursday.

After this transaction, an open offer will be launched to acquire 20.93 million fully paid-up equity shares of JB Chemicals, representing 26 per cent. The open offer, too, is being made at a price of Rs 745 per share, said the company statement.       

The deal size is estimated to be around $500 million (Rs 3,750 crore).

This is the second KKR investment in the past two months. In May, it agreed to invest Rs 11,367 crore ($1.5 billion) in Reliance Industries’ digital assets subsidiary Jio Platforms to acquire 2.32 per cent stake — its largest investment in Asia to date.

The BSE statement also noted that once the buyer has acquired 54 per cent stake, the sellers have the right to sell additional equity shares ensuring KKR’s aggregate shareholding in JB Chemicals does not exceed 64.9 per cent.

Jyotindra Bhagwanlal Mody, founder, chairman and managing director of JB Chemicals, said, “For more than four decades, JB Chemicals’ mission has been to deliver affordable, high-quality pharmaceutical products that improve the lives of individuals living in India and around the world. We are thrilled that KKR — with its deep knowledge of the pharmaceutical industry and experience in investing in the sector, as well as its extensive investments in India — will take our mission forward and build on the foundation of core values that our family has instilled in this company. This will also create growth opportunities for our people to progress.” 

JB Chemicals that started as an API maker in the late Seventies owns some of the top brands in the Indian market — Rantac, Cilacar, and Metrogyl. With a salesforce of around 2,000, it had a turnover of Rs 1,640 crore in 2019-20. It ranks among the top 40 companies in the domestic market. 

Sanjay Nayar, partner and chief executive officer of KKR India, said, “We are pleased that the promoters of JB Chemicals have selected us to take over their rich legacy and to help the company continue its expansion, which is clearly driven by its diversified product portfolio and state-of-the-art manufacturing capabilities. We believe JB Chemicals has an opportunity to accelerate its growth and leverage its strengths to enter into new therapeutic areas. We look forward to working with the management team to build on the company’s strong foundation, and believe this investment underscores KKR’s ongoing commitment to India’s long-term economic prospects and the potential of its companies.”

KKR will fund this investment from Asian Fund III. The transaction is subject to regulatory and other customary approvals.