Dr. Reddy’s Lab has completed the acquisition of select divisions of Wockhardt Limited’s (“Wockhardt”) branded generics business in India and a few other international territories of Nepal, Sri Lanka, Bhutan and Maldives.
The business comprises of a portfolio of 62 brands in multiple therapy areas such as Respiratory, Neurology, VMS, Dermatology, Gastroenterology, Pain and Vaccines, which would transfer to Dr.Reddy’s along with related sales and marketing teams; and the manufacturing plant located in Baddi, Himachal Pradesh with all plant employees (together the ‘Business Undertaking’).
On February 12, 2020, Dr. Reddy’s signed a Business Transfer Agreement (‘BTA’) with Wockhardt, to acquire the above-referred business undertaking for an upfront consideration of Rs1,850cr.
In view of the COVID-19 pandemic and the consequent government restrictions, there has been a reduction in the revenue from the sales of the products forming part of the Business Undertaking during March & April, 2020. Subsequently, through an amendment to the BTA, Dr. Reddy’s and
Wockhardt have agreed that the deal consideration shall now be upto Rs1,850cr, to be paid as per the following terms:
a) an amount of Rs1,483cr paid on the date of closing
b) an amount of Rs67cr to be deposited in an escrow account which shall be released
subject to adjustments for, inter alia, net working capital, employee liabilities and certain other contractual and statutory liabilities
c) an amount of Rs. 300 Crores (‘Holdback Amount’) which shall be released as follows:
• If the revenue from sales of the products forming part of the Business Undertaking during the 12 months post-closing exceeds Rs480cr, Dr. Reddy’s will be required to pay to Wockhardt, an amount equal to 2 (two) times the amount by which the revenue exceeds Rs480cr, subject to the maximum of the Holdback Amount.
