Wockhardt share price rallied 13 percent intraday on November 18 after sources told Moneycontrol that domestic strategic suitors and global private equity firms are in the race to buy select business divisions of the company. These divisions have been put on the block to reduce the firm’s debt burden.
The stock gained 19 percent in the last one month. It was quoting at Rs 301.40, up Rs 30.40, or 11.22 percent on the BSE at 1251 hours IST.
“Cipla, Dr Reddy’s Laboratories, private equity fund Carlyle and Hong Kong-based investment fund PAG are among the suitors in the race for these select business portfolios,” said a source.
“Wockhardt is expecting a valuation between Rs 2,400-2,700 crore as the combined valuation for the proposed sale of these segments. The company has attempted various routes in the past to raise funds and this is a fresh construct involving the sale of controlling stake and has attracted considerable interest. Sizeable domestic businesses have always attracted attention from both strategic as well as buyout funds on account of stable growth and lesser regulatory risks,” the source said.
The company had a total debt of Rs 3,367 crore as on March 31, 2019, and its current market capitalisation stands at Rs 3,022 crore.
It has a diversified product portfolio with presence in therapeutic segments such as cardiology, dermatology, diabetes, respiratory and ophthalmology. Moneycontrol could not independently verify which of the segments have been identified for divestment.
“Due diligence is being carried out by the suitors and the submission of bids is expected in the final week of November,” added another source.
Investment bank Moelis is advising Wockhardt on the sale process.
The company reported a consolidated net loss of Rs 94.24 crore in Q2 FY20 compared to a net loss of Rs 30.84 crore in Q2 FY19. H1FY20 EBITDA showed an improvement from Rs 81 crore to Rs 99 crore over the previous year.
India business stood at Rs 227 crore in Q2FY20 as compared to Rs 455 crore in Q2FY19. The de-growth was mainly on account of lower sales in quality generics division and in some of the therapeutic areas. India business contributed 28% of the global revenues. Net sales for the period under review dropped 28.7 percent to Rs 802.18 crore.
News Source: Moneycontrol