According to persons with knowledge of the situation, the sale of a stake in Cipla Ltd. is at risk because prospective purchasers object to the valuation of 1.09 trillion rupees ($13.1 billion) that members of the founding family are seeking for the Indian company in a deal.
The founders are reportedly demanding around 1,350 rupees per share, which has stalled negotiations between the family members and potential buyers, including industrial companies and private equity firms. Bloomberg figures show that the price is 10% higher than Wednesday’s closing price.
About 33% of Cipla’s shares, worth close to $4 billion at Wednesday’s closing price, are under the control of the family shareholder group, also referred to as the promoter group in India. Since CNBC-TV18 revealed on July 27 that the Hamied family was likely to sell a portion of their investment, Cipla shares have increased by roughly 16%.
The persons, who asked not to be named because the information is private, claimed that the family members might sell some or all of their respective holdings in Cipla. The business was established in 1935 by Non-Executive Chairman Yusuf K. Hamied’s father lived in Mumbai, and at the turn of the millennium, it set the standard for the marketing of low-cost, generic HIV medications throughout Africa.
The persons stated that discussions are still ongoing and that no choice has been made regarding the agreement. According to the persons, the family members still have the option to reduce the asking price or decide against moving forward with the transaction. Requests for comment from a firm spokeswoman went unanswered.
During the pandemic, COVID-19 therapies included the right to produce and sell Gilead Sciences Inc.’s remdesivir in 127 nations, including India and South Africa, helped Cipla increase sales. According to the company’s website, it operates in more than 80 countries and offers more than 1,500 items in a range of therapeutic categories.
According to the company website, Samina Hamied, executive vice-chairperson of Cipla, is a member of the founding family’s third generation and a former employee of Goldman Sachs Group Inc. Her father MK Hamied serves as non-executive vice chairman. Her uncle is YK Hamied.
Several family-owned businesses in Asia are thinking about succession planning, depending on whether the following generation wants to assume the helm. The 66-year-old Mukesh Ambani, chairman of Reliance Industries Ltd., stated that he will use the next five years to train his children to transform India’s most valuable corporation. Others are contemplating business sales, giving private equity companies a wide range of prospective acquisition prospects.
