Dr Reddy’s completes acquisition of Wockhardt’s branded generics business

Our Bureau Hyderabad | Updated on June 10, 2020 Published on June 10, 2020

Dr Reddy’s Laboratories Ltd

Dr Reddy’s Laboratories has completed the acquisition of select divisions of Wockhardt’s branded generics business in India and a few other international territories — Nepal, Sri Lanka, Bhutan and the Maldives.

The business comprises a portfolio of 62 brands in multiple therapy areas such as respiratory, neurology, VMS, dermatology, gastroenterology, pain and vaccines.

All the related sales and marketing teams and the manufacturing plant located in Baddi, Himachal Pradesh with all plant employees were also transferred to Hyderabad-based Dr Reddy’s.

“This deal is in line with our strategic focus on India and has paved a path for accelerated growth and leadership in the domestic market,’’ said GV Prasad, Co-Chairman and Managing Director, Dr Reddy’s, in a press release issued on Wednesday.

“We believe that the acquired portfolio offers a good growth potential for us,” he added.

The deal

On February 12, Dr. Reddy’s signed a Business Transfer Agreement (BTA) with Wockhardt to acquire the above-referred business undertaking for an upfront consideration of ₹1,850 crore.

In view of the Covid-19 pandemic and the consequent lockdown restrictions, there has been a reduction in the revenue from sales of the products forming part of the business undertaking during March and April.

Subsequently, through an amendment to the BTA, Dr. Reddy’s and Wockhardt have agreed that the deal consideration shall now be up to ₹1,850 crore.

The payment mode comprised an amount of ₹1,483 crore paid on the date of closing and an amount of ₹67 crore to be deposited in an escrow account which shall be released subject to adjustments for, inter alia, net working capital, employee liabilities and certain other contractual and statutory liabilities.

An amount of ₹300 crore (holdback amount) will be released subject to certain conditions.

If the revenue from sales of the products forming part of the business undertaking during the 12 months post-closing exceeds ₹480 crore, Dr Reddy’s will be required to pay Wockhardt an amount equal to twice the amount by which the revenue exceeds ₹480 crore subject to the maximum of the holdback amount.

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Published on June 10, 2020
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