Gland Pharma said to be weighing lower stake sale to Fosun to gain deal

The new deal structure was being considered as an automatic approval route if the previous deal isn’t approved by India’s Cabinet Committee of Economic Affairs.

Shareholders of India’s Gland Pharma, an injectables manufacturer, are said to be considering selling a 74% stake to China’s Fosun Pharma as a hedge against failing to secure government approval for the previously announced 86% share deal estimated to be worth about $1.3 billion.

The new deal structure was being considered as an automatic approval route if the previous deal isn’t approved by India’s Cabinet Committee on Economic Affairs (CCEA), which has had the deal under consideration for three months, Livemint reported, citing people close to the discussions. Gland Pharma shareholders include the buyout firm KKR.

“Both sides have extended the exclusivity period to conclude the deal to [the] end of September,” Livemint’s sources said.

Last month, Bloomberg reported that the CCEA decided against the Fosun purchase of Gland but had yet to officially inform the companies. India’s Foreign Investment Promotion Board gave the green light to the deal in March after the Competition Commission of India approved it in late 2016. 

The deal was first announced a little over a year ago by Fosun Pharma. Founded in 1978, Gland’s manufacturing facility was the first U.S. FDA-approved injectables provider in India, and the U.S. and European markets are its major sources of revenues, Fosun said in a release.

The deal has the potential to become one of the largest Chinese pharma foreign M&A transactions, exceeding Sanpower’s recent $820 million deal to buy Dendreon from Valeant.