Multiples Alternate Asset Mgt-led group to buy Cadila's animal health biz

The deal is to sell one of Cadila's two businesses on a slump sale basis as a going concern, for a lump sum of Rs 2,921 cr on cash-free and debt-free basis

Cadila Healthcare Ltd (Zydus Cadila)'s wholly-owned material subsidiary Zydus Animal Health and Investments Limited (ZAHL) is set to sell its animal healthcare business to a consortium led by Multiples Alternate Asset Management for nearly Rs 3,000 crore.

Zydus Cadila on Wednesday announced that ZAHL has entered into a business transfer agreement (BTA) and other ancillary agreements to sell and transfer Zydus AH, its animal healthcare established markets undertaking to the Multiples-led consortium.

The deal is to sell one of the two business undertakings of ZAHL on a slump sale basis as a going concern, for a lump sum consideration of Rs 2,921 crore on a cash-free and debt-free basis, subject to certain closing date adjustments and other conditions.  The transaction involves transfer of immovable assets, movable assets, inventory, brands and intangible assets, contracts, licenses and permissions, business records, employees along with employee benefit funds, insurance policies, other assets and assumed liabilities.

While Multiples, along with its consortium partners, will acquire 100 per cent business of Zydus AH, the slump sale transaction is subject to closing conditions and receipt of all statutory and other approvals and is expected to be completed within a period of 90 days.

The Multiples-led consortium, which includes Canada Pension Plan Investment Board and RARE Enterprises, has agreed to purchase the undertaking through a special purpose vehicle (SPV) controlled by them, in the name of Zenex Animal Health India Private Limited.

Commenting on the deal, Cadila Healthcare chairman Pankaj Patel said that over the last three decades, Zydus AH had grown to become a pioneer and one of the market leaders in the Indian animal health industry. "With Multiples and its consortium partners committed to growing the business, we are sure that Zydus AH will continue to grow and strengthen its position in the industry."

One of the fastest growing animal health businesses in India, Zydus AH claims leadership position across a spectrum of therapeutic and nutritional products for livestock and poultry animal segments, employing roughly 700 people along with a manufacturing facility in Haridwar.

According to Dr Arun Atrey, Managing Director of ZAHL, the deal was expected to be seamless for the company's customers, suppliers and other stakeholders, with no disruption to our operations.

Commenting on the transaction, Multiples Alternate Asset Management founder and CEO Renuka Ramnath said that the consortium will be able to invest in a business that has been helping farmers enhance their productivity and incomes by delivering innovative animal health solutions.

"I expect Multiples to do many such large transactions in the coming years. We are also delighted to partner with CPP Investments and RARE enterprises for our first consortium deal. We look forward to working with them and helping the company unlock its full potential and create value for all stakeholders," Ramnath added. On the other hand, RARE Enterprises Partner Rakesh Jhunjhunwala stated that the animal healthcare business segment had "huge growth potential" with the acquired company having a top quality management team.

For Zydus, Moelis & Co, Mumbai acted as an investment banker and Cyril Amarchand Mangaldas & Co. acted as the Legal Advisors.

Meanwhile, ZAHL has another animal healthcare business undertaking which is expected to commence animal health business in the US and certain European countries and this business undertaking is not part of the transaction. Zydus continues to develop the animal health business products for those markets and at present, this business is in the development and investment phase.