Drug maker Dr Reddy’s Laboratories today said it has decided to acquire Netherlands-based OctoPlus NV,a speciality pharmaceutical company,for about 27.4 million euros (approx. Rs 192 crore).
The transaction is expected to be completed by the end of the current financial year,company’s Vice Chairman and Chief Executive Officer G V Prasad said.
In a joint statement with OctoPlus,DRL said both the companies have reached a conditional agreement in connection with an intended public offer by DRL,or a wholly-owned subsidiary of DRL.
This is for all issued and outstanding ordinary shares in the capital of OctoPlus,at an offer price of euro 0.52 in cash for each OctoPlus share,it said.
“It is currently expected that the offer memorandum will be submitted to the AFM for approval within five weeks from the date of this announcement and that the offer,if made,will commence during the first half of December,” the statement said.
The offer values 100 per cent of the issued and outstanding ordinary shares of OctoPlus at euros 27.4 million,it added.
Prasad said the acquisition gives them the ability to strengthen technological capabilities in the areas of drug delivery.
“We are buying it for technology. And we are in the process of improving our R&D capabilities globally. They have strong expertise which we are interested in,” Prasad said.
Total revenues of OctoPlus for the first six months of the calendar year stood at euros 4.8 million with a net loss of euros 5.8 million.
Replying to a query,Prasad said turning OctoPlus into a profitable company would take some time.
“It is not going to be immediate. We are not buying this for profit or loss. It is a long- erm process. Products have to be developed and registered and go to markets,” he said.
DRL is keen to further expand into the fast growing Fee for Service business and they will retain OctoPlus as a specialist standalone entity to develop speciality generics. OctoPlus will become a centre of excellence for complex injectables with retention of highly skilled and dedicated professionals in the facility,the statement added.
The offer price represents a premium of 30 per cent over the closing price of OctoPlus of October 19.
“The transaction will be financed with funds readily available at Dr Reddy’s OctoPlus’ identity and head office will be maintained. OctoPlus agreed to enter into a business collaboration agreement for investigational formulation research,” the statement further said.
Dr Reddy’s will provide OctoPlus with fee for service and milestone payments as consideration for services to be rendered by OctoPlus for a maximum amount of 2 million euros during the next six months,according to the agreement.