Cadila Healthcare is buying the Zoetis ($ZTS) manufacturing site in Haridwar for about $29 million in a deal that will give the Indian drugmaker production facilities for medicated feed additives, anti-infectives, parasiticides and nutritionals for livestock.
The deal, which was disclosed in an SEC filing by Zoetis, is part of the animal health giant's huge cost-cutting plan to reduce its manufacturing overhead. Two weeks ago, Zoetis disclosed that it had sold three facilities located in North Carolina, Colorado and Arkansas to Huvepharma, based in Sofia, Bulgaria, in a deal valued at about $40 million.
The agreement with Cadila also includes the sale of a portfolio of generic products produced at the Haridwar facility. Those products, the company said in the regulatory filing, "represent a portion of the lower-revenue, relatively lower-margin product stock keeping units" of the company.
The transaction, which should be completed in the first quarter of 2016, isn't expected to have a material impact on Zoetis.
Zoetis has said it plans to exit a total of 10 of its 27 manufacturing facilities around the world and trim about 25% of its workforce in order to reach $300 million in savings in 2017. The company said it expects the effort to inflate its operating margin to 34% from the 25% it has been running. The cost-cutting plan is the company's response to pressure from activist investor Bill Ackman to trim overhead in an effort to boost its share price.
- check out the SEC filing