India has approved a $1.9 billion bid for pharmaceuticals company Agila Specialties, as the country strives to dispel its image as a hostile destination for foreign investors.
Mylan, a US company that makes generic drugs, signed an agreement to buy Agila from Strides Arcolab in late February, but the acquisition stumbled after one set of regulators complained that selling to a foreign buyer could affect the availability of important cancer drugs in India.
The competition authorities took a different view, waiving the deal through on the grounds that Agila had an insignificant presence in the Indian pharmaceuticals market. Most of the drugs it makes are sold in the US.
“This is not an Indian-revenue driven business,” said a source familiar with the transaction. “Clearly, from a regulatory perspective this business wasn’t going to impact India. But we always knew the approval process would be tedious. This is India. There’s a moving regulatory yardstick.”
However, Mylan prevailed in the end, and it won the final approval from India’s Cabinet Committee on Economic Affairs on Wednesday, after the prime minister personally approved the deal on August 23.
That spurred the deal to its conclusion, with the Foreign Investment Promotion Board adding its own approval last week.
“We are very pleased to have received all outstanding Indian pre-merger regulatory approvals for the Agila transaction, especially considering the increased government regulation and oversight with respect to foreign investment in India,” said Mylan chief executive Heather Bresch, in a statement.
Agila, headquartered in Bangalore, produces generic injectable medicines, including a product portfolio of more than 300 filings approved globally. Its products include vials, pre-filled syringes, ampoules, lyophilisation, cytotoxics and antibiotics.
The price tag includes a cash payment of $1.6 billion and a conditional payment of $250 million, financed in part by a $1 billion bridge loan from Morgan Stanley.
Morgan Stanley acted as financial adviser for Mylan, while Jefferies advised Strides Arcolab and Agila Specialties
Skadden Arps, Slaughter and May, and Platinum Partners acted as legal advisers for Mylan, while Herbert Smith Freehills, Pinheiro Neto Advogados and DSK Legal acted as legal advisers for Strides Arcolab and Agila Specialties. Jones Day also acted as legal adviser for Strides Arcolab.
