German firm to buy 20% stake in Dabur Pharma

New Delhi: After acquiring a majority stake in Dabur Pharma, German healthcare firm Fresenius Kabi said it will launch a public offer to purchase further 20 per cent stake in 4-6 weeks time.

Fresenius Kabi had picked up 73.3 per cent stake in the Indian company for Rs 878.2 crore. If the open offer is fully subscribed, it will cost the company another Rs 240 crore at Rs 76.59 per share.

Fresenius also said that it has no plans to delist Dabur Pharma after the acquisition. “By law, we have to keep 10 per cent of the equity for the public. By law, we also have to make an open offer for 20 per cent. So if there is any oversubscription in the open offer – like up to 93 per cent – we’ll have to sell back to the market. We want to have at least 75.1 per cent equity stake because that secures our position in Dabur Pharma as per Indian laws,” the Fresenius Kabi President & Chief Executive Officer, Mr Rainer Baule, said.

Mr Baule said Fresenius Kabi has no plans to raise the open offer price for Dabur Pharma shares. The existing management of Dabur Pharma will continue to function. The open offer would be made through investment banker Morgan Stanley. Dabur Pharma project shares closed up 6.2 per cent at Rs 73.45 on the BSE.

Announcing the future plans, Mr Baule said the company would invest about $60 million towards marketing expenses every year and a majority of this would be spent on expanding Dabur Pharma’s oncology business globally. In addition, it would invest $10 million for augmenting the production capacity of Dabur Pharma’s active pharmaceutical ingredients plant .

India will also be the manufacturing hub of Fresenius for oncology products. Dabur Pharma has been supplying generic drugs and API for cancer treatment and achieved a turnover of around Rs 258 crore in 2007-08. Fresenius is also looking at expanding the employee base of Dabur’s oncology division. “Dabur Pharma is an ideal combination as we do not have oncology products, oncology research or international product registrations in oncology,” Mr Baule said.

Dabur Pharma’s founder and Director, Mr Anand Burman, said, “We have exited the generic oncology space. According to the agreement, we cannot go back to the generic oncology business. We still have interests in and around pharmaceuticals, like our diagnostics business.”