Elder was looking to hive off assets in a bid to reduce its Rs 1,300-crore debt, and was also reportedly in talks with Sanofi earlier.
The part of Elder's business up for sale -- which also is its core operation -- comprises a portfolio of 30 brands in segments such as women's healthcare, pain management, wound care and nutraceuticals therapeutic segments, according to the press release that announced the sale.
The company notched up a gross profit of Rs 157 crore on sales of Rs 1,233 crore in the 15-month period ending June 2013. The company's market capitalization stands at around 680 crore.
Under the proposed transaction, Elder would continue to manufacture for and supply products to Torrent at its existing facilities for a period of three years.
Torrent would fund the acquisition through a mix of internal accruals and bank borrowings, the release added.
"The transaction is a strategic fit for Torrent and will strengthen its core prescription-based business," said Sudhir Mehta, Chairman, Torrent Group. He added the deal would also result in cost and revenue synergies in Torrent's existing domestic formulations business.
The sale helps address Elder's recent challenges relating to debt and would help the firm deleverage its balance sheet, CMD Alok Saxena said. "We will now focus on growing our in-licensing, anti-infectives and exports business."
Torrent has a strong presence in Europe and Latin American markets with 55% of revenues from abroad, said analyst SP Tulsian. "They have a relatively small presence in the local market," he added, pointing out that Elder has a strong domestic portfolio of brands in India. "So this is a good deal for Torrent."
Torrent Pharma stock price
On December 13, 2013, at 14:10 hrs Torrent Pharmaceuticals was quoting at Rs 462.40, down Rs 37.3, or 7.46 percent. The 52-week high of the share was Rs 521.00 and the 52-week low was Rs 328.00.
The company's trailing 12-month (TTM) EPS was at Rs 37.40 per share as per the quarter ended September 2013. The stock's price-to-earnings (P/E) ratio was 12.36. The latest book value of the company is Rs 97.57 per share. At current value, the price-to-book value of the company is 4.74.
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