Drug maker JB Chemicals’ over Rs 900 crore deal with a Johnson and Johnson subsidiary company, to sell its over-the-counter business in Russia and CIS, has developed a hitch.
JB Chem has received claims from J&J group entities regarding the amount held in the escrow account, it said. The escrow amount is estimated at Rs 160 crore, an industry representative said.
The development comes about 15 months after JB Chem inked the OTC business sale agreement with Cilag GmbH International, a J&J subsidiary.
The company and its board of directors consider this action untenable, do not accept the claims and are seeking appropriate legal advice in relation to the same, JB Chem said. The company shall spare no efforts to protect the interest of all its stakeholders, it added.
In May last year, JB Chem had signed an agreement to sell its OTC business in Russia and the CIS for Rs 939 crore. Later in July, JB Chem had said, it had received about Rs 738 crore and an agreed portion of consideration was in an escrow account.
The total size of the deal, including the sale of trademarks, registration and brands was estimated at Rs 1,155 crore, when the agreement was signed.
It included the sale of worldwide rights and registrations of three OTC brands (Doktor Mom, Rinza and Fitovit) to Cilag. JB Chem was to continue to produce the products for Cilag for another five years.
The sale was to also involve the transfer of the employees (about 220 people) of the Russia/CIS OTC business.
A query from Business Line to J&J on the development remained unanswered.