M&A-minded Piramal near $500M deal to sell pharma stake to KKR: report

Indian contract manufacturer and generics maker Piramal has invested millions in recent years to boost production of high-potency pharmaceutical ingredients at its Michigan plant and abroad. Now, an outside investor could help the CDMO's parent company on its quest to grow through major acquisitions.  

India's Piramal Enterprises may sell a 20% minority stake in the pharma unit—a slice valued at $500 million—to private equity giant KKR & Co., Money Control reported.

KKR reportedly emerged as a frontrunner for a piece of the complex generics and contract manufacturing business after another firm, TPG Capital, dropped out of the running. Piramal retained investment bank Rothschild in January to pursue selling the minority stake as part of a $500 million cash raise aimed at future acquisitions. 

Piramal broadcast its intent to sell its contract pharmaceuticals business back in October 2018, valuing the unit at $1 billion, according to Bloomberg. In March, Piramal said it had reached a deal to sell Decision Resources Group, its in-house healthcare insights and analytics business, to Clarivate Analytics for $900 million. 

According to Money Control, KKR's investment in Piramal would be a change in form for the equity firm, which typically favors majority buyouts. 

RELATED: India's Piramal adds capacity to U.S. high-potency API site 

In January, Piramal invested $10 million to build out its high-potency active pharmaceutical ingredients (API) site in Riverview, Michigan.

The company added 50 jobs at the facility, where it makes HPAPis with low exposure levels. It also added two kilo labs as well as quality control and analysis labs. It is now capable of making HPAPis with OELs down to 1mcg/m3. After the expansion, Piramal said the site would employ 150 workers. 

That expansion follows Piramal's initial purchase of the Riverview site in 2016 for $53 million in cash and milestone payments. At the time, the site boasted 60,000 square feet of facilities, eight chemical drug development and production laboratories, and six full-scale production areas, including facilities for high-potency API manufacturing.

RELATED: India's Piramal investing $55M in API production