Cipla founding family's stake sale in jeopardy over $13 bn valuation target

By Anto Antony

The sale of a stake in Cipla Ltd. is in jeopardy as potential buyers have balked at the Rs 1.09 trillion ($13.1 billion) valuation members of the founding family are targeting for the Indian firm in a deal, according to people familiar with the matter.
 

Negotiations between the family members and prospective buyers, including companies in the industry and private equity firms, are no longer moving forward, as the founders are demanding about Rs 1,350 per share, the people said. The price represents a premium of about 10 per cent over Wednesday’s close, according to Bloomberg calculations.

 

The family shareholder group, known in India as the promoter group, controls around 33 per cent of Cipla’s shares, which are worth nearly $4 billion at Wednesday’s closing price. Cipla shares have climbed about 16 per cent since CNBC-TV18 reported on July 27 the Hamied family was likely to sell part of their stake.

The family members could sell some or all of their respective stakes in Cipla, the people said, asking not to be identified as the information isn’t public. The firm was founded in 1935 by Non-Executive Chairman Yusuf K Hamied’s father in Mumbai and rose to global prominence by pioneering the sale of cheap, generic HIV drugs across Africa at the turn of the millennium.

Deliberations are ongoing and no final decision has been made on the deal, the people said. The family members can still revise the asking price lower or decide not to proceed with the sale, according to the people. A spokesperson for the firm didn’t respond to requests for comment.

Cipla’s sales were boosted during the pandemic by Covid-19 treatments such as the license to manufacture and market Gilead Sciences Inc.’s remdesivir in 127 countries including India and South Africa. The company has a presence in more than 80 countries and provides over 1,500 products across various therapeutic categories, its website shows.

Samina Hamied, Cipla’s executive vice-chairperson, is part of the third generation of the founding family, and is a Goldman Sachs Group Inc. alumnus, according to the firm’s website. MK Hamied, her father, is non-executive vice chairman. YK Hamied is her uncle.

Several of Asia’s family-run companies are considering succession plans, depending on whether the next generation wants to take the reins. Mukesh Ambani, 66, said he will spend the next five years as chairman of Reliance Industries Ltd. preparing his children to transform India’s most valuable company. Others are considering selling off their businesses, providing a robust potential pipeline of targets for private equity firms.