Strides' Agila deal pegged at Rs 7k cr

Media reports of Bangalore-based pharmaceutical company Strides Arcolab Ltd (Strides) planning to sell its injectable medicines business (Agila Specialties) to US drug maker Pfizer refuse to die down. The company has not issued a categorical denial of the development so far.

In a statement to BSE on Thursday, Strides said, “The company does not consider it appropriate to respond to market rumours,” keeping the speculation juggernaut running.
CEO of Agila Specialties V S Iyer could not be reached for a response, despite several attempts.

The company's share continued its bull run on Thursday on the BSE, reaching a 52-week high of Rs 1,211 during the day, but closed down 0.4 per cent at Rs 1,117.85.

A senior analyst with a brokerage firm said that the deal size could potentially be in the region of Rs 7,000 crore, five times the revenues of Agila in 2012. Revenues of Agila for the nine months ended September 30, 2012 stood at Rs 1,000 crore and EBIDTA at Rs 332 crore.

Analyst Bhavin Shah of Dolat Capital said, “Based on a full-year projection of revenues for 2012 at Rs 1,400 crore, the deal size could be Rs 7,000 crore.”

He added that if the deal fructifies, the residual business of Strides Arcolabs would be worth about Rs 900 crore. The company had debt of about Rs 1,215 crore on its books as on September 30, 2012. He pegged the enterprise value of Agila at a maximum of Rs 7,500 crore.

Another analyst, at IDFC Securities, Nitin Agarwal, while declining to comment on the deal specifically, agreed that a five-fold valuation is likely if and when a deal is concluded.

In January this year, Strides sold a 94 per cent stake in its Australian and South East Asian arm, Ascent Pharmahealth Limited, for an enterprise value of Rs 1,900 crore.

Meanwhile, the Bangalore-based company said on Thursday that its subsidiary Onco Therapies has received ANDA approval for Ifosfamide, an injectable chemotherapy drug, the market for which is about $15 million in the US alone.

According to the company’s September 30, 2012 earnings statement, promoters hold 27.69 per cent of the capital, with institutional holding at 54.06 per cent and others 18.24 per cent.

Based on the closing price of Thursday, the market capitalization of the company was Rs 6,598 crore.

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