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October 20, 2015

Recipharm to Acquire Nitin Lifesciences for $103M

  • Recipharm said today it will acquire a 74% majority stake in Indian sterile injectables CMO Nitin Lifesciences from its founders and managing owners the Sobti family for INR 6.712 billion ($103.3 million) cash.

    Recipharm said it will work with the Sobti family to further grow the business into a leader within the sterile CDMO market, including lyophilization, in India and in emerging markets.

    Headquartered at Karnal in Northern India, Nitin specializes in manufacturing liquid ampoules, liquid vials, sterile dry powder (beta lactam & non beta lactam), multidose eye/ear drops and lyophilized vials covering more than 200 formulations across various therapeutic areas including antibiotics, anti-malarial, NSAIDs, anti-inflammatory and local anesthetics.

    Nitin employs approximately 500 employees at its three manufacturing facilities—the newest of which is located in Paonta Sahib, India, and began operations last year.

    “It is our stated aim to have a more global footprint and participate in the good opportunities that emerging markets bring,” Recipharm CEO Thomas Eldered said in a statement. “The Indian market is particularly attractive showing high growth levels and the transaction firmly establishes Recipharm's emerging market strategy. Nitin can also be used as a platform for entry into other regions.”

    Added Nitin Sobti, COO of Nitin Lifesciences: “It will significantly add to our service offering for Indian customers by way of new technologies, best in class account management as well as global standards of GMP and regulatory compliance.”

    Sobti will continue as COO of the company while CEO Chetan Sobti will also retain his position with the acquired company, which will continue to trade under its current name.

    The combined business has current pro-forma revenue of SEK 3.5 billion ($421.6 million) and earnings before interest, taxes, depreciation and amortization or EBITDA of SEK 607 million ($73.1 million), Recipharm said.

    The deal values Nitin at INR 9.071 billion ($139.6 million) and represents a premium of 12.4 times EBITDA for the 12 months as of August of INR 732 million ($11.3 million)

    Recipharm said the deal would be accretive to company growth and earnings per share.

    The acquisition is expected to be completed in the first quarter of 2016, subject to approval by Indian Foreign Investment Promotion Board.

    Some time after the deal closes, Recipharm said, it will have the option to acquire the remaining shares in Nitin, and current owners will have the option to sell to Recipharm their remaining shares in Nitin. The valuation of the remaining shares will be based on Nitin's EBITDA performance until the options are exercised, Recipharm said.

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