Deal may be worth Rs 625 cr, CDR divestment requirement met.
Wockhardt Ltd, which recently undertook a debt restructuring scheme, has signed an agreement to divest its non-core nutritional business to Abbott, a global healthcare company.
Sources said the deal was worth close to $130 million (Rs 625 crore). A Wockhardt spokesperson declined to confirm the size of the deal.
The company said the transaction was subject to customary closing conditions and various approvals, and would be closed in the second half of 2009.
The company’s nutrition business includes some of the major child care brands, such as Farex, Dexolac and Nusobee infant formulas, and Farex weaning cereal. The adult protein supplement, Protinex, is a segment leader in the vitamin and health supplement category.
Wockhardt had acquired Dumex India, along with its two products, Protinex and Farex, from Royal Numico NV of The Netherlands for an undisclosed amount in 2006. At that time, Protinex and Farex, both well-known nutrition brands in the country for over 50 years, had a combined annual sales of Rs 60 crore.
“At Wockhardt, we invested and nurtured to build a valuable brand equity for these heritage brands and it was time now for a specialised nutrition-focused company, as Abbott, to be able to leverage its full potential in the global markets,” said Wockhardt Chairman Habil Khorakiwala.
Wockhardt’s over Rs 3,400 crore debt was restructured by its lenders in June. As per the corporate debt restructuring (CDR) scheme, it has to divest its non-core assets at an estimated value of Rs 790 crore, within the next six years. It had already mobilised close to Rs 300 crore from the recent sale of its loss-making German subsidiary, Esparma, to Mova GmbH and the animal health division to Vétoquinol, a French veterinary care company.
With these sales, the company is likely to go slow on sale of other assets it had put on the block, including its plans of divesting the proposed stake sale of its hospital chain, as the CDR package approved by its lenders have taken care of the company’s immediate financial commitments.
The company is also looking at divesting a 32-acre dairy and milk processing unit in Punjab which the company inherited from its acquisition of Dumex India and part of 250 acres in Aurngabad. Wockhardt’s promoter, Habil Khorakiwala, was also planning to divest less than 26 per cent stake in Wockhardt Hospitals, which has 12 hospitals, for a valuation of Rs 800-1,200 crore. But the company may wait for more time to get good valuations, said sources.
