MUMBAI: The once acquisitive Piramals now appear to be in the mood to sell. Nearly two months after selling its domestic solutions business to Abbott for Rs 18,000 crore, Piramal Healthcare said on Wednesday that it will sell its diagnostics unit to Super Religare Laboratories (SRL), for Rs 600 crore.
Following the deal, SRL - controlled by billionaire brothers Malvinder and Shivinder Singh - would become India's largest provider of laboratory services. tiffany heart
Piramal Healthcare will receive Rs 300 crore on closing of the deal and the balance would be paid over a period of three years. In FY10, Piramal Healthcare's diagnostics business, called Piramal Diagnostic Services' (PDSL), revenue stood at Rs 200 crore. Piramal would continue to be involved in the business and would have a representation on the board of directors and the executive committee of SRL, a company statement said.
The combined entity would have 170 laboratories and 1,500 collection centres and would serve more than 12 million customers annually. The deal could prove beneficial to SRL. SRL's reach and brand recognition, coupled with strong experience in managing hospital's implant labs, will be complemented by PDSL's strong processes and systems, highly regarded pool of doctors and a robust, integrated service model covering both pathology and radiology.
christian audigier wholesale The transaction announced on Wednesday leaves Piramal Healthcare with the contract-manufacturing and over-the-counter drugs businesses. After trading in the positive territory for most part of the day, the Piramal Healthcare stock on the BSE dipped in late trading and closed 1% lower at Rs 505.
Much like the deal with Abbott, where Piramal had agreed not to engage in generic pharmaceutical business in India for the next eight years, in this deal also, Piramals are said to have agreed not to enter the diagnostic-test services market for three years.
According to Ranjit Kapadia, an analyst at HDFC Securities, it's a good deal in terms of the price, which is 3 times the sales, and 16 times (16x) EBITDA of the diagnostics business. ''I think the Piramals sold out as they were getting a good price, and also since they had certain constraints in taking the business forward. It was a loss-making venture as of last year when it posted a loss of around Rs 5 crore. For SRL, it makes sense to expand their footprint across the country by acquiring this business, as it has synergy with Fortis Healthcare hospitals, promoted by the Singh family,'' he said.
Ajay Piramal, chairman of Piramal Healthcare, said the entire proceeds would come to Piramal Healthcare. ''We feel this is the right time to take the business to the next level. Spain The development will give it the scale and size to serve a much larger base of Indian customers. This combination will go a long way in changing the diagnostic services landscape of not just India but also the Asia region,'' he said.
''This combination creates one of the largest and best in class service providers not just in India but also in Asia, given our existing presence and relationships in the Middle East and SAARC countries,'' SRL's Shivinder Singh said. For Reprint Rights: timescontent.com
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