Mumbai: In the largest ever cross border deal in India, Mylan Labs of US have picked up a 71.5 per cent stake in Hyderabad-based Matrix Labs for $736 million.
US based Mylan will also takeover debts up to $200 million from Matrix, which will mount up the total deal value close to a billion dollars.
Mylan Labs plans to buy 51.5 per cent stake from Temasek and New Bridge, which are the strategic investors in Hyderabad-based Matrix.
The multi national company will make an open offer at Rs 306 per share for an additional 20 per cent stake.
For Mylan, buying out Matrix will mean significant vertical integration. Mylan will look at combining the active pharmaceutical ingredients (API) and drug development businesses of Matrix with its own interests in finished dosage forms.
"All the business lines are pretty intact. In fact the first one, the generic CPI gets much more strengthened than what it was earlier and I think from the biz point of view there are no apprehensions or risks," said CEO, Matrix Labs Rajiv Malik.
Matrix has been witnessing strong growth from the time of its formation in 2000. It made more than Rs 200 crore in 2003 from marketing the antidepressant drug Citalopram through a non-infringing process.
It later took over several Indian companies in API manufacturing like Vorin Labs, Medicorp and concord.
Also, on the international front Matrix Labs took stakes in drug firms like Mchem of China, Explora of Switzerland and made a large deal last year by taking over Belgium's Docpharma.
In fact, only last year Matrix and Strides ArcoLabs intended to merge but could not agree on valuations.
Going forward, strategic investors will continue to have a play in mylan and matrix.
"New Bridge is investing Rs 93 million into Mylan stock whereas Tamesak is investing Rs 46 million. The promoters are investing in Mylan as a part of the ongoing alliance," Matrix Labs CEO Rajiv Malik says.
Analysts say Mylan and Matrix deal will work well on the integration front and it will be interesting to follow how the two companies leverage on their capabilities to strengthen their position in Europe.