Abbot Healthcare signed a definitive agreement with Piramal Healthcare to acquire full ownership of Piramal's domestic formulations, which manufactures generic drugs, for an up-front payment of $2.12 billion (Rs. 9,945 crore) and an additional $400 million (Rs.1,876 crore) to be paid annually for the next four years.  

Luthra & Luthra’s Delhi corporate and tax practice worked jointly to help conclude Abbott’s purchase of Piramal’s healthcare solutions business, domestic formulations in one of the largest pharma deals.

Speaking with Bar & Bench, Direct Tax Partner S.R. Patnaik said, “It was a very challenging assignment as the VPO was signed sometime in May and the deal got confirmed on September 8, 2010. Considering a transaction of $3.8 billion, it got concluded quickly in a short period of time. It was a slump sale and one of the largest acquisitions of business, not entity. And a number of issues had to be looked into from various perspectives including the business perspective, legal aspect as well as tax structuring perspective”.

Abbot was represented by Luthra & Luthra Delhi Corporate Partner Samir Dudhoria and recently promoted Bangalore based Partner Vikrant Kumar and Senior Associate Aparna Mittal, under the guidance of Senior Partner Mohit Saraf. Partners Vikas Srivastava, S.R. Patnaik and Indirect Tax Partner Sanjeev Sachdeva along with Indirect Tax Group Head J.P. Singh advised on tax related issues.

Amlaw reports that Baker & McKenzie has had a six-decade relationship with Abbott. Partner and client service director Pablo Garcia-Moreno lead the transaction.

Crawford Bayley advised Piramal on domestic legal issues. Senior Partner R.A. Shah at Crawford has been on the Board of Directors of Piramal Healthcare since 1968. The team also comprised of Partner Sanjay R. Buch, Senior Associates Krishna Venkat, Preety Singh and Sumit Vadhavkar. Associates Gaurav Rohra and Ankit Srivastav assisted along with Para Legals Parinaz Madan and Haabil Vahanvaty.

UK-based Stephenson Harwood advised Piramal, who was led by their Corporate M & A Partner Andrew Edge. Stephenson Harwood has previously advised Piramal on its acquisition of US anesthetics producer, Minrad and acquisition of certain blood plasma products from PlasmaSelect AG. 

VC Circle reports that Abbott will pay Rs.785 ($ 17.5) per share. On Friday, Piramal Healthcare traded at Rs.553.65 ($12.2). This will push Abbott to the top position in the Indian pharma landscape. This transaction is the largest acquisition in the pharma space in India after the Daiichi-Ranbaxy deal.

In 2008, Japanese company, Daiichi Sankyo, acquired over 51 percent stake in Ranbaxy Laboratories in a $4.6 billion (Rs. 20,700 crore) transaction. Daiichi Sankyo had bought Ranbaxy promoters’ stake at 31 percent over the previous closing price, and a premium of 54 percent to Ranbaxy’s average daily closing price on the NSE for the three months ending on June 10, 2008. Vaish advised Ranbaxy in its takeover by Japanese pharma giant, Daiichi, who were advised by P&A Law Offices.

The healthcare industry is expected to grow by leaps and bounds in the years to come. The last year has seen several acquisitions in the pharma space including Abbott’s acquisition of Belgium based Solvay Pharma, Hospira buying Orchid Chemicals and Sanofi buying Shanta Biotechnics.