The Hindu Business Line : Dishman to buy Swiss co Solutia's unit

The Ahmedabad-based Dishman Pharmaceuticals & Chemicals Ltd has reached an agreement to buy the pharmaceutical services business of Solutia Inc for a consideration of $74.5 million (Rs 340 crore).

The acquisition is Dishman's second in Switzerland this year and comes weeks after the industry was rife with information on the company being poised for an acquisition in Switzerland.

The acquisition strengthens Dishman's synergies in the contract research and manufacturing space, Mr J.R. Vyas, Managing Director of Dishman, told Business Line.

"It will improve the topline and bottomline of the company and this will be reflected in the second quarter of this year," he said.

Dishman has inked a definitive agreement to purchase Solutia's drug services business, comprising Carbogen AG and Amcis AG units in Switzerland.

Rabo India Securities, a wholly owned subsidiary of Rabo India Finance Pvt Ltd, advised the transaction.

A continuation of the spate of overseas acquisitions by Indian companies, Dishman's deal is significant for the mid-level domestic drug-makers segment, said a pharma analyst.

Dishman Pharma will buy 100 per cent equity in Carbogen and Amcis from Solutia Europe SA / NV as well as certain other assets used in the pharmaceutical services business, which includes a working capital of $8 million. The transaction is subject to regulatory approvals and authorisation by the bankruptcy court overseeing Solutia's reorganisation.

Dishman's consolidated turnover is Rs 277 crore.

Mr Vyas said the acquisition would be funded using $15 million from the FCCB fund of $50 million and a $60-million loan syndication from ICICI and Rabo.

Carbogen-Amcis is a pharmaceutical services provider, offering drug development and commercialisation services to the pharmaceutical and biopharmaceutical industry at all stages of drug development since 1982. This business has research facilities at three sites in Switzerland: Aarau, Bubendorf, and Neuland. During 2005, the business had a turnover of about 80 million Swiss Francs ($66 million). Carbogen-Amcis generated approximately 90 per cent of its revenue in 2005 from repeat customers. All intellectual property, patents and trademarks, customer contracts, as well as employees of the business have been included in the transaction, Dishman said.

Dishman expects to enhance the business prospects of Carbogen-Amcis by building on synergies and expanding the product suite and renewing the focus on key accounts. It also expects to leverage its operational efficiencies in India to improve margins in the Swiss operation.

The Dishman shares closed at Rs 196.05, down 3.59 per cent.

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