Torrent Pharma to acquire JB Chemicals at Rs 25,689 crore valuation

Ahmedabad-based drugmaker Torrent Pharma has agreed to buy a controlling stake in JB Chemicals from global private equity firm KKR at an equity valuation of Rs 25,689 crore ($3 billion). The deal, which will see a merger of the two entities, is among the biggest in the Indian pharmaceutical sector and brings to an end year-long negotiations. They had come close to a deal last year but couldn’t agree on valuation at the time.

With the acquisition of JB Chemicals, Torrent will move up to fifth rank by market share in the $26 billion Indian pharmaceutical market ahead of Alkem and Intas Pharma. ET had on June 29 been the first to report on the merger details.

The deal was announced following a marathon meeting of Torrent Pharma’s board of directors on Sunday.

5x Return likely for KKR
That’s against the stock’s Friday close of Rs 1,792. Torrent will also acquire up to 2.8% equity from certain employees of JB Chemicals at the Rs 1,600 apiece. The second part of the deal will follow amerger between Torrent and JB Chemicals through a scheme of arrangement. As per the approval by the two boards, upon the merger, every shareholder holding 100 shares in JB Chemicals will get 51 shares of Torrent. KKR had been the first to seek a restart of negotiations, according to the people cited above. Even at the discounted price, it will end with a fivefold return on what it paid to acquire JB Chemicals in 2020.

Torrent Pharma posted FY25 revenue of Rs 11,500 crore, of which the Indian market accounted for Rs 6,393 crore. JB Chemicals recorded total FY25 sales of Rs 3,918 crore, of which the Indian market accounted for Rs 2,269 crore, growing at 20% over the previous year.

Over the last decade, Torrent has grown inorganically with a string of deals that included skincare drugs maker Curatio in 2022 and more recently a range of anti-diabetes drugs from Boehringer Ingelheim. Apress statement from Torrent Pharma said the transaction marks a significant step in its ambition to create a future-ready, diversified healthcare platform combining a deep chronic segment heritage with emerging international CDMO (contract development and manufacturing) capabilities. The deal is a strong fit for Torrent and complements its India presence, helping it move into the promising field of contract manufacturing besides allowing for market synergy, an analyst said. “Torrent has a proven record of making deals work successfully,” the person added.

The company will get access to leading brands in the chronic segment and entry into untapped therapeutic areas such as ophthalmology. Torrent said it will derive operational synergies across multiple business functions. “We are pleased to have on board the JB Chemicals heritage and build on the platform for the future,” said Torrent Pharma executive chairman Samir Mehta. “Torrent’s deep India presence and JB Chemicals’ fast-growing India business, combined with the CDMO and international footprint offers immense potential to scale both revenue and profitability.”

For KKR, this follows strong investment activity in India, where the buyout group has deployed more than $2 billion in private equity investments in the past year alone, in addition to a recent $600 million financing of Manipal Group. This also builds on KKR’s strong healthcare track record, including a fivefold return in Max Healthcare in 2022 that had also marked the largest block deal by a private equity firm in India, and recent investments in healthcare, including Healthcare Global Enterprises, BMH (Baby Memorial Hospital), Healthium and Infinx.

JB Chemicals said it had built a strong foundation to deliver market-leading growth, as well as consistent improvement in profitability in the medium and long term. “As we now enter a new chapter alongside Torrent Pharmaceuticals, we are confident that the combined strengths of our organizations will unlock greater opportunities to enhance healthcare access across our markets,” said Nikhil Chopra, chief executive officer and whole time director of JB Chemicals.