Fosun revises bid for KKR-backed Gland Pharma

The Chinese company agreed in July of last year to pay up to $1.26 billion for a 79.99% interest in Gland and subscribe to $60.8 million in convertible preference shares that would take its holding to 86.08%. KKR, which is said to have invested around $230 million in the company in 2014, stood to receive $576.3 million for its 38.41% stake.

The deal was approved by the Chinese authorities, while antitrust filings have been completed in the US and India, but India’s Cabinet Committee on Economic Affairs has yet to complete its review. The termination date for the transaction has already been extended several times.

The latest extension, which gives the parties until October 3, comes as Fosun agreed to reduce its equity interest in Gland to 74%. This would appear to allow it to take advantage of a relaxation in foreign investment restrictions introduced last year that means the cabinet committee can, in certain cases, only block acquisitions of 75% or more of a domestic company.

Under the revised terms, KKR and the founder shareholders of Gland will sell a 57.89% interest in the company, as opposed to the earlier agreed 69.97%. KKR’s exit terms are unlikely to be affected – and another investor, the Vetter family, will still receive $100.3 million for its 10.02% stake – with the founder shareholders retaining a larger interest. The put option allows them to sell these shares for up to $355 million within a year of the deal closing. The sum was previously $180 million.

There has also been an amendment to the maximum payment to the founding shareholders should one of Gland’s products receive US Food & Drug Administration (FDA) approval within a certain timeframe, according to a filing by Fosun International.

KKR was attracted to Gland due to its cost advantage as an India-based manufacturer and its strong position in an industry struggling with product shortages, notably in the US. It is also vertically integrated, making many of the active pharmaceutical ingredients used in its drugs and thereby allowing greater control of the process.

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• Topics
• South Asia
• Healthcare
• Trade sale
• Regulation
• India
• KKR