In one of Corporate India’s biggest takeovers abroad, Hyderabad-based Dr Reddy’s Laboratories won the race to buy out Betapharm Group, the fourth-largest generic pharmaceuticals company in Germany, for over Rs 2,500 crore ($572 million)) in an all-cash deal. Delhi-based Ranbaxy was another front-runner to take over the German firm till Wednesday but it lost out in the last lap.Dr Reddy’s would acquire 100 per cent stake in Betapharm from the 3I group, Europe’s leading private equity house. The acquisition will add about $200 million to Dr Reddy’s revenues immediately, DRL chief executive GV Prasad said. The transaction is likely to close in the first week of March. “We’re happy with the price we paid,” Dr Reddy’s Prasad said.The DRL takeover is expected to catalyse the plans of India Inc which is on an acquisition spree abroad. Among the recent mega buyouts abroad, Reliance Infocomm had acquired Flag Telecom for $ 207 million last year, VSNL bought out Teleglobe for $ 239 million and Tata Tea acquired Tetley for $ 432 million. The acquisition by Dr Reddy’s has come at a time when the bid by Mittal Steel—owned by non-resident Indian Lakshmi Mittal—for Arcelor is facing tough opposition in Europe.The transaction will be funded through Dr Reddy’s internal cash reserves and debt. “We see our investment in Betapharm as a key strategic initiative towards becoming a mid-sized global pharmaceutical company with strong presence in all key pharmaceutical markets,” Dr Anji Reddy, Chairman of Dr Reddy’s Laboratories, said.Stock markets cheered the latest overseas takeover. Reacting to the news, Dr Reddy’s closed 9.3 per cent up at Rs 1281.95 as compared to yesterday’s close of Rs 1172.Founded in 1993, Betapharm has a market share of about 3.5 per cent and makes high-quality generic drugs with focus on long-term therapy products with high prescription rates. It is also the fastest growing generics company in the last five years and gives Dr Reddy’s a foothold in the European markets. Located in Augsburg, Germany, Betapharm currently employs about 370 people including a sales force of about 250 with a gross turnover of Rs 869 crore in 2005.“Betapharm with its differentiated business model has all the key elements for achieving success in the fast growing generics market in Germany. We strongly believe that this strategic investment will generate substantial opportunities for long-term value creation for both the companies,” Prasad said.
