Cipla Promoters to Offload 2.5% Stake at INR 2,650 Cr

Promoters Yusuf Khwaja Hamied and Mustafa Khwaja Hamied plan to sell the stake to institutional investors, potentially generating up to INR 1,849 Cr

The promoter family of the pharma major Cipla is set to offload a 2.5% stake in the company through block deals today, potentially raising INR 2,650 Cr.

Reportedly, the shares will be offered in the price range of INR 1,289-1,357 per share.

At the lower end of the price band, the stocks would be sold at a discount of 5% from Cipla's closing price on Tuesday. As of March 2024, the promoters hold nearly 33.5% of the company.

Promoters Yusuf Khwaja Hamied and Mustafa Khwaja Hamied plan to sell the stake to institutional investors, potentially generating up to INR 1,849 Cr ($244.6 million).

The base sale involves a 2% stake with an option to increase to 2.5%. As of December 31, the promoters owned 36.11% of Cipla.

Kotak Securities is acting as the sole broker for the secondary sale of equity shares of the drugmaker.

Cipla recently reported a 79% year-on-year rise in net profit for the fourth quarter, reaching INR 939 Cr, surpassing estimates. This increase was largely due to a low base from the previous year's one-time impairment charges.

Additionally, Cipla is exploring marketing Eli Lilly’s weight loss drugs in India and plans to launch four peptide assets in the US market for FY25.

The $13B Deal Discord

Following a series of collaborative efforts and funding preparation to acquire Cipla, the country's third-largest drugmaker has finally come to the field.

Reportedly, it was earlier in discussion with two consortiums to sell a controlling 60% stake. The two consortiums include one led by Torrent Pharmaceuticals Ltd, and the other a group of buyout firms led by BPEA EQT and General Atlantic.

Reportedly, the consortium led by Torrent Pharma is backed by its promoters, the Mehta family. The consortium also includes investments from entities linked to Dilip Shanghvi-led Sun Pharmaceutical Industries Ltd and the Patel family-owned Zydus Lifesciences Ltd.

Initially, Bernstein analysts had estimated the deal to be valued at around the $7 billion mark, however, the demand by the Cipla family to raise the bar to $13 billion has sparked disagreements among the promoters.

Founded in 1935 by Dr Khwaja Abdul Hamied, Cipla is an Indian multinational pharmaceutical company. The Mumbai-based pharma has a presence in over 80 countries worldwide. Cipla aims to make healthcare accessible and affordable to all.

Cipla’s Latest Developments

Recently, Global pharmaceutical company Cipla partnered with Kemwell Biopharma and Manipal Education & Medical Group in the US. The joint venture seeks to expedite the development, manufacturing, and distribution of cell therapies.

The collaborative effort aims to focus on the development and commercialization of innovative cell therapy products targeting critical unmet medical needs in the United States, Japan, and the European Union.

In another significant development, Cipla joined hands with Skye Air Mobility to offer drone-powered medicine delivery in Himachal Pradesh. With this initiative, the companies sought to ensure the timely delivery of medicines to chemists and clinics in remote areas while mitigating the risk of compromising cold chain products due to temperature fluctuations.