The Hindu Business Line : Mylan close to taking Matrix

Deal in the making
Temasek, Newbridge may also sell their holding
N. Prasad to assist Mylan's global biz strategy
Mylan may have to announce an open offer to Matrix shareholders for acquiring another 20 per cent equity from them

Hyderabad , Aug. 26

In perhaps the biggest merger & acquisition (M&A) deal in the Indian pharma space, Mylan Laboratories Inc is all set to firm up its proposal to buy controlling stake in Matrix Laboratories Ltd for Rs 3,225 crore on Monday.

The $1.26-billion US generics major Mylan, which is said be in takeover talks with the Rs 1,159-crore turnover Matrix Laboratories for the last three-four months, has reportedly completed due diligence of the Indian entity.

It has arrived at a valuation of over $1-billion (Rs 4,600 crore).

According to sources familiar with the deal, the Matrix Labs' Indian chief promoter, Mr N. Prasad, along with representatives of private equity funds, is currently busy in the US, hardselling with the Mylan top brass to clinch an attractive deal price.

Sources said an official announcement on the acquisition could be expected within 48 hours from Mylan's meeting scheduled for Monday. Mylan, currently confined just to the US market unlike its competitors, is keen to expand its operations across the world.

Integrated player

The Matrix buy would enable the US formulations company to evolve into an integrated player with the global quality cost-effective API manufacturing capabilities of Matrix in its fold.

"The price negotiations of the Matrix Labs' promoters with Mylan top brass have almost reached a concluding stage.

The price could be anywhere between Rs 300 and Rs 350 per share. Mr Prasad, who owns close to 17 per cent equity stake, is likely to sell around 12 per cent stake and retain minority stake of 5 per cent.

However, he will continue to be on the Matrix Labs' board," sources told Business Line.

Vast experience

In view of the vast experience and expertise of Mr Prasad in successfully executing M&As that saw Matrix Labs evolve into a global pharma major, the Mylan management was said to be eager to utilise his services for finalising business strategies of unrepresented emerging markets, sources said.

Further, sources said, two of the foreign private equity funds - Temasek and Newbridge, which hold a little over 38 per cent stake in Matrix Labs, are also keen on divesting their entire holding in the company in favour of Mylan.

Their decision would depend on the attractiveness of the offer price.

Once the acquisition of 12 per cent holding of Mr Prasad and/or 38 per cent from Temasek and Newbridge is through, it would be mandatory for Mylan to announce an open offer to the Matrix shareholders for acquiring another 20 per cent equity from them.

However, both Matrix and Mylan have declined to comment on the market rumours and media reports on the acquisition.

The Matrix scrip of Rs 2 is currently hovering at Rs 277 with the year's highest price of Rs 312 and lowest of Rs 162 on the Indian bourses.

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