Piramal Enterprises Ltd. will sell its healthcare insights and analytics business to the U.S.-based Clarivate Analytics Plc. for $950 million (around Rs 6,750 crore).
The company’s board approved divesting 100 percent of its Decision Resources Group business in a meeting today, according to an exchange filing. The total sale value includes $900 million in cash and about $50 million worth of Clarivate’s ordinary shares that will be issued after one year of the transaction.
Piramal had initially invested $650 million in 2012 to acquire DRG, of which $260 million was infused as equity. It has realised 2.3 times its initial equity investment in rupee terms, the filing said.
The segment accounted for 9 percent of Piramal Enterprises’ total revenue in the first six months of the current financial year, according to the company’s presentation. DRG specialises in creating commercial strategies for pharma, biotech and medical technology companies around the world.
DRG’s revenue mainly comes from the U.S., Europe and Japan, Group Chairman Ajay Piramal told BloombergQuint. It barely has any sales in India, he said. “We need to grow this business and the best way to grow this business is to have a certain size... besides we got a good valuation,” he said, adding the funds from the sale would go towards paring the group’s debt.
The value that we were adding to it from here would not be equal to the value that Clarivate could add.Ajay Piramal, Chairman, Piramal Group
Piramal, in the filing, had said Clarivate, with its size and scale, was well positioned to further accelerate DRG’s growth potential. The transaction, he said, allowed for creation of value for stakeholders. The acquisition will also “well-position” Clarivate in the $19-billion life science analytics market, the filing said.
Shares of Piramal Enterprises rose more than 6 percent after the announcement, compared with a flat Nifty 50 Index.
Watch | the full conversation with Ajay Piramal here...
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