Lupin Ltd shares gained over 3% in intra-day trade on Wednesday, i.e. 13 November, after the company announced that it has agreed to sell its entire stake in Japanese unit Kyowa Pharmaceutical Industry Co. Ltd to private equity firm Unison Capital Partners for 57.26 billion yen (around Rs 3,690 crore).
However, by 10:50 am, Lupin shares erased all its early gains to trade 0.1% lower at Rs 734.75 after hitting a high of Rs 758.70 in morning trade. Notably, the stock has lost nearly 14% in the last one year.
According to a notification on BSE, Lupin’s subsidiary Nanomi B.V. will divest its entire stake (99.82%) in Kyowa to Unison’s entity Plutus. The deal is expected to be closed by the end of this financial year.
The proposed transaction will generate post-tax net cash inflow of about 32.6 billion yen (Rs 2,104 crore), Lupin said in a statement.
The divested business recorded revenue of Rs 1,786.4 crore in FY19, constituting 10.7% of Lupin’s total revenue from operations.
The post-transaction net debt of the company will stand at Rs 1,129 crore compared to Rs 4,361.8 crore as on 30 September. Net debt-to-equity ratio will improve to 0.08 as compared to 0.32 as on 30 September.
Lupin CEO Vinita Gupta informed that the company is exiting the Japanese business at 4-5 times of the initial investment, adding that the deal proceeds will be used to strengthen its balance sheet as well as provide growth capital to support organic and inorganic initiatives for its focus markets.
Lupin said it will now be confining itself to complex generics, biosimilars and specialty portfolio in Japan. The company recently launched biosimilar etanercept to treat psoriasis in tie-up with Japan's Nichi-Iko.
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