Shares of Novartis India staged their biggest single day gain in over six years on Friday, February 20, jumping as much as 20% to hit an intraday high of ₹996.50 on the BSE. According to The Hindu BusinessLine, the stock was trading at ₹953.85 as of midday, up ₹123.40 or 14.86% from Thursday's close of ₹830.45. The pharmaceutical company's stock has shown remarkable recovery momentum, gaining 22% in the last one month and 15% over the past three months, demonstrating strong investor confidence in the acquisition deal. The surge follows a public announcement by the acquiring consortium, with turnover standing at ₹80.72 crore on volumes of 8.24 lakh shares, significantly higher than the two-week average quantity of 0.23 lakh shares, indicating heavy investor interest. At current levels, the company's market capitalisation stands at approximately ₹2,375 crore, with the stock having a dividend yield of 2.61% and trading at a TTM PE of 24.33.
According to the latest exchange filing by Novartis India, the company has officially completed the sale of its majority stake to a consortium led by WaveRise Investments Limited, ChrysCapital Fund X, and Two Infinity Partners, along with ChrysCapital X, LLC and OceanEdge Investments Limited. The deal involves 1.74 crore fully paid-up equity shares, representing 70.68% of the company's paid-up equity share capital. As per The Hindu BusinessLine, the acquirers have signed a Share Purchase Agreement with Novartis AG to acquire 1,74,50,680 equity shares at an aggregate consideration of approximately ₹1,446 crore. The transaction structure shows one acquirer will acquire 56.45% of the equity share capital at ₹860.64 per share, while two other consortium entities will acquire 10.32% and 3.91% respectively at ₹701.25 per share. Upon completion, Novartis AG will cease to be the promoter of Novartis India, with the acquirers assuming control and being classified as the new promoters.
The transaction has triggered a mandatory open offer for public shareholders to tender up to 26% of the company's equity at ₹860.64 per share, representing a 3.64% premium to Thursday's closing price of ₹830.45. According to The Hindu BusinessLine, the acquirers have announced an open offer to purchase up to 64,19,608 fully paid-up equity shares representing 26% of the voting share capital of Novartis India. The total consideration for the open offer works out to ₹552.49 crore, payable entirely in cash, assuming full acceptance. If the open offer is fully subscribed, the acquirers' combined shareholding will rise to 96.68%, while if no shares are tendered, their stake will remain at 70.68%. Following the consummation of the transaction, Novartis AG will hold nil shares, cease to be in control of the company, and will be reclassified from the promoter category to the public category in line with SEBI regulations. The acquirers have clarified they do not intend to delist Novartis India but will ensure compliance with the 25% minimum public shareholding norm if required. As per Grow Mudra, the open offer will be managed by Axis Capital, and at ₹974, Novartis India stock was trading well above the open offer price, implying a premium of around 13%.
As part of the acquisition, Novartis India will undergo a significant rebranding within 120 days of completion, changing its name to remove all references to the Novartis group. According to The Hindu BusinessLine, Novartis India's board has also approved a company covenant and warranty deed in connection with the transaction. This strategic move reflects the company's new ownership structure and independent operations under the ChrysCapital-led consortium. ChrysCapital is one of India's largest and oldest homegrown private equity firms, founded in 1999 by Ashish Dhawan and Rajat Gupta, with notable portfolio companies including Mphasis, Hinduja Global Solutions, Intas Pharmaceuticals, and Bandhan Bank. The firm could potentially use Novartis India as a platform to expand its domestic pharmaceutical portfolio. Additionally, the acquiring consortium has made an offer to purchase an additional 26% stake from Novartis India's public shareholders, under takeover regulations that mandate such an exercise on purchase of a shareholding of over 25%. As per Grow Mudra, the acquiring consortium has also been granted the right to nominate certain individuals to the board of directors post consummation of the transaction.
Novartis India operates with a portfolio of products across chronic therapy segments such as diabetes, neurology, cardiology and dermatology, with painkiller Voveran among its key brands. According to Moneycontrol, for FY24-25, the company reported revenue of ₹356.27 crore and net profit of ₹100.90 crore. At current levels, the company's market capitalisation stands at approximately ₹2,375 crore, with the stock having a dividend yield of 2.61% and trading at a TTM PE of 24.33. The company's strong financial performance and diversified product portfolio across key therapeutic areas position it well for future growth under its new private equity ownership structure.
