Andhranews

Hyderabad, Aug. 28: In the largest cross-border acquisition in the Indian pharmaceuticals sector, Mylan Laboratories, Inc. will be acquiring up to 71.5 per cent stake in Matrix Laboratories Ltd, a Secunderabad-based drug maker, for $736 million.

The Pittsburgh-based Mylan Laboratories said on Monday it will be paying Rs 306 per outstanding equity share of Matrix Laboratories. “Mylan will be acquiring the 39 per cent stake held in Matrix Labs by Temasek Holdings and Newbridge Capital, and 12 per cent of the 17 per cent stake held by N. Prasad, the main promoter of Matrix Laboratories,” Mr C. Ramakrishna, a director of Matrix Laboratories, said on Monday. Temasek Holdings is the investment arm of the Singapore government, while Newbridge Capital is a private equity firm.

The NYSE-listed Mylan will also be making an “open offer” to Matrix’s remaining shareholders to acquire up to an additional 20 per cent of Matrix’s outstanding equity shares. Matrix will remain a publicly-traded company in India and will continue to operate on an independent basis, Mylan said in a statement. The transaction is expected to be completed in a time period of three months.

A portion of the funds received by Newbridge, Temasek and Mr N. Prasad will be used to purchase newly-issued shares of Mylan common stock. Newbridge has agreed to invest approximately $93 million, Temasek has agreed to invest approximately $46 million, and Mr N. Prasad has agreed to invest $25 million, each at a price of $20.85 per Mylan share. Mr N. Prasad will continue to hold a five per cent stake in Matrix, and will be non-executive chairman, while Mr Rajiv Malik will continue to remain as CEO of the company.

“Mr Prasad will be joining the board of Mylan Laboratories and executive management team and will be focusing on growing Mylan in the Asia-Pacific region. All the 3,000 employees of Matrix Laboratories will be retained,” Mr Ramakrishna said. Explaining the rationale for the sale of Matrix Laboratories to Mylan, Mr Ramakrishna said, “The pharmaceuticals industry is going through a period of consolidation, with the result that some of our customers in North America and Europe have been acquired, making the process of acquiring customers long and cumbersome. We had a choice of either acquiring other companies for growth, or be acquired by a larger player like Mylan, which would give us a wider platform in the North American market.”

According to him, Mylan will be transferring some of its production to Matrix manufacturing units in Hyderabad and Nashik. “All our plants are US FDA approved and we have divided our business into three clear divisions — antiretrovirals, bulk drugs and finished dosages. Mylan will get access to all three divisions, apart from our R&D facilities,” Mr Ramakrishna said.

“Matrix will provide Mylan with a significant presence in important emerging pharmaceutical markets, including India, China, and Africa, as well as an European footprint and distribution network through Matrix’s Docpharma subsidiary,” the company statement said. Matrix’s Docpharma subsidiary is a marketer of branded generics in Belgium and the Netherlands.

Hyderabad, Aug. 28: Nimmagadda Prasad, the executive chairman of Matrix Laboratories, will have a payday of Rs 550 crores from the sale of 12 per cent of his 17 per cent holding in the company. Mr Prasad will be retaining the balance of five per cent. “Mr Prasad founded Matrix Laboratories in May 2000 with a capital of $1 million and the company is now worth $1 billion.

As part of the deal with Mylan Laboratories, he will be divesting about 1.80 crore shares in Matrix in favour of Mylan, which will work out to Rs 550 crores, at Rs 306 per equity share,” Mr C. Ramakrishna, a director of Matrix Laboratories, said on Monday. While Mr Ramakrishna, who himself stands to make a tidy sum because of his own shareholding in the company, says Matrix decided to be acquired by Mylan to continue growing, market sources say that it was probably pressure from Temasek Holdings and Newbridge Capital, which together held a 39 per cent stake in Matrix, which forced his hand. “It was a good deal for both Temasek and Newbridge, who have seen their investment value doubling in two years,” says Mr Ramakrishna.

“Mr Prasad will be retaining his five per cent stake for at least two years,” he adds. The Rs 550-crore payday is certainly not a bad deal for a businessman who got into the pharma industry by accident. “I needed a job when I was doing my Ph.D. in Physics in New Delhi, and one day I noticed a vacancy sign on Indian Molasses’ door. They were looking for a guy to do routine testing of molasses. It was brain-numbing work, which only required a high-school student to do the job. I was overqualified for the job, and the salary was Rs 566 per month, but I took it, and stayed on till my boss noticed my qualifications and encouraged me to go into marketing,” Mr Prasad told this newspaper in an interview.

That set me on a career in pharmaceuticals.” Mr Prasad took over a nearly-bankrupt drug company in Hyderabad, which was renamed Matrix Laboratories in 2000. In past six years, Matrix acquired companies in India and abroad, including Docpharma NV.

Mumbai, Aug. 28: India’s second-largest motorcycle maker Bajaj Auto Limited on Monday signed an initial agreement with the government of Maharashtra to acquire 250 acres (101.2 hectares) of land in Chakan near Pune, where it already has a manufacturing facility. It intends to roll out four-wheeled commercial vehicles from this plant.

The company will invest Rs 2,000 crores in a new manufacturing plant in Maharashtra, which would produce a total of 500,000 units of three-wheelers and four-wheelers, a company statement said. “The products, which are to be manufactured at this new plant coming up at Chakan, will meet the needs of the market in providing environment-friendly, technologically adva-nced and economical means of goods and passenger transport in the country.

The products are also expected to add significantly to the already growing exports of the company,” said Mr Rahul Bajaj, chairman, Bajaj Auto Limited. Under the MoU, Bajaj Auto along with captive process vendors will invest Rs 1,750 crores. An additional investment of Rs 250 crores by vendors, in the existing facilities is envisaged, for supplying components to the new plant. The investment will be entirely funded by internal accruals. Bajaj Auto’s new plant would be providing direct employment for about 1,000 persons.

Mumbai, Aug. 28: UltraTech has earmarked a capex of Rs 1,424 crores to be spent over the next three years in order to improve productivity and tackle rising energy costs, said Mr Kumar Mangalam Birla, chairman, UltraTech Cement Limited, on Monday at the company’s sixth annual general meeting in Mumbai. Out of this Rs 1,274 crores will be invested for a 4 million tonne capacity expansion at its Andhra Pradesh plant.

Of the total capex of Rs 1,424 crores, Rs 844 crores is earmarked for installing captive power plants at the company’s unit in Gujarat and Chhattisgarh and the balance towards de-bottlenecking (Rs 308 crores) and various RMCs (ready mix concretes). “To cater to the growing demand for cement and growth in the market share of South India, the company will additionally invest Rs 1,274 crores towards a four metric-tonne per annum (MTPA) capacity expansion at its plant in Andhra Pradesh, inclusive of setting up 1.30 MTPA split grinding unit and a 46 mega watt (MW) captive thermal power plant,” said Mr Birla.

The brownfield expansion project in Andhra Pradesh is expected to go into operation by December 2007. The company’s units in Gujarat with an investment of Rs 574 crores, and Chhattisgarh with an investment of Rs 270 crores will see an installation of captive power plants of 92 MW and 50 MW respectively.The company also expects eight to ten per cent volume growth in the current fiscal along with an increase of 20 per cent in gross turnover. It also expects an increase in its capacity utilisation from 89 per cent to 104 per cent in the current fiscal, which is expected to be 17.74 million tonnes in FY 2007.

The investment will be funded by internal accruals and debts in the equal ratio. According to Mr Birla, there will be an total addition of 75 million tonnes in the cement sector by 2010, which will include investment in the greenfield and brownfield projects by several existing players. On the company’s outlook going forward, Mr Birla stated that the government’s initiatives on infrastructure development and the boom in the housing sector are major drivers for the cement industry.

The Indian cement sector is the second largest in the world after China. Regardless, the per capita consumption of the cement in India is just 125 kgs which is very low in comparison with the average world consumption of 267 kgs, underlining its tremendous growth potential.

New Delhi, Aug. 28: Ficci has asked the government to provide “political risk cover” to companies, who acquire 25 per cent or more equity in foreign companies, to boost India Inc.’s acquisitions abroad. Speaking to the reporters, after releasing the study “India Inc.’s Acquisition Abroad”, Ficci secretary general Amit Mitra said that to encourage Indian companies to look for acquisitions abroad, the government must provide them “political risk cover” on the lines of the US government’s Overseas Private Investment Corp. (OPIC).

“If something like this could happen, our acquisitions in foreign countries will increase many-fold,” said Mr Mitra. Ficci has also demanded the creation of a fund for acquiring foreign hi-tech firms and country and continent-specific policies. Ficci’s study revealed that foreign acquisitions in 2005 saw a huge increase of 130 compared with 46 acquisitions in the year 2004, due to liberalisation in the policy regime in 2005, that allowed Indian firms to invest in entities abroad up to 200 per cent of their net worth in a year.

The study found that the IT and BPO sector has taken the lead in terms of number of cross-border acquisition activities undertaken by Indian enterprises. Of the 306 outbound acquisitions inked by Indian companies during the period January 2000 to July 2006, this sector accounted for 28 per cent with 90 deals registered across the globe.

The study also found that while IT and software companies accounted for more than 50 per cent of the acquisitions made by Indian companies in the year 2000, subsequent years saw greater dispersal of acquisition activities with other sectors like healthcare and pharma, automotive and metals joining the league.

The United States dominates the global acquisition landscape for the Indian enterprises. India Inc. acquired stakes in a total of 100 businesses in the US during January 2000 to July 2006, accounting for 32 per cent of their total acquisitions across the globe. The United Kingdom is the second-most important destination for the Indian companies venturing out for inorganic expansion overseas, with 40 acquisitions registered in the country during the same period.

New Delhi, Aug. 28: Private airline Air Sahara and American aviation giant Boeing on Monday ann-ounced an agreement whereby Air Sahara would buy 10 Boeing 737-800 aircraft. Visibly buoyant at the order, Boeing vice-president Dinesh Keskar announced that Boeing had projected a need of 856 new commercial aircraft worth more than $72 billion over the next 20 years. He added that Boeing was also firming up orders worth about $18 billion in the next five years.

In an important move, the American aviation giant also stated that it was prepared to give a grant of $10 million to the Indian civil aviation ministry for development of infrastructure at flying schools in the country. “There is a growing demand for pilots and we would like the infrastructure to keep pace,” Mr Keskar said.

The company also plans to spend $200 million on setting up a maintenance unit to service the Boeing aircraft belonging to all airlines in India. “This will help airlines using Boeing aircraft to cut down on operating costs,” he asserted.

Boeing has also declared in its projection that the maximum demand in the Indian civil aviation market will be for single-aisle aircraft. For instance, a whopping 676 out of the projected 856 aircraft to enter the Indian skies in the next 20 years will be single-aisle aircraft. Air Sahara president Alok Sharma announced that the new aircraft his airline is acquiring are not substitutes for other aircraft but are additions.

Chennai, Aug. 28: The Union IT and communications minister Dayanidhi Maran said on Monday that a new policy to cater to the needs of the semiconductor industry in the country would be announced soon.

“We will be asking for a meeting with Prime Minister Manmohan Singh to put forward the proposal and hope to bring out the policy soon,” he told media persons after a meeting with a delegation of the Taiwanese Semiconductor Association in Chennai.

The proposal on the semiconductor policy has been submitted to the finance minister, he added. The ministry of IT communication would be the nodal agency for implementing the policy. He said the in-dustry has the potential to generate 3.58 million jobs.

New Delhi, Aug. 28: Advanced Micro Devices (AMD), the world’s second-largest computer chip maker, is planning to invest about $500 million in SemIndia’s proposed chip manufacturing facility near Hyderabad, according to PTI. The AMD investment in SemIndia’s SEZ, where silicon chips would be manufactured, would require a total investment of $3 billion, PTI quoted some official sources as saying.

Apart from AMD, the Singapore-based Flextronics has already announced it would pick up a minority stake in the venture. Of the $3 billion investment, $1 billion would come through equity and the rest through debt, the PTI report said. Besides equity, the US chip giant would also provide technology to SemIndia for the manufacturing facility.

When Mr Vinod Aggarwal, SemIndia CEO, was contacted by this reporter, he denied the media reports as mere speculation. He said “We are talking to various potential investors and AMD is one of them, but we have not taken any decision.” Mr Ajay Marathe, president of AMD India, termed the report as baseless. He told this newspaper that, “The agency has not spoken to me and I don’t know where they got the story from.”

New York, Aug. 28: EBay announced on Monday that it had hired Google to sell advertising that would appear on many pages shown to users outside the United States.
The deal is noteworthy not only because the two companies are increasingly in direct competition — in areas like online phone service, payment and product listings — but also because eBay signed a similar partnership in May with Yahoo that included ads on US pages.

That alliance was seen as a way to counter the growing power of Google.
Google is the leader in selling text advertisements on the Internet. In this business, it dwarfs Yahoo, especially in Europe. So as eBay looked to build its international advertising revenue, Google was in a position to offer a better deal than Yahoo.

Hyderabad, Aug. 28: Apollo Health Street (AHS), the Apollo group’s healthcare services company specialising in BPO and IT services, on Monday acquired US-based hospital billing and receivables firm Armanti Financial Services (AFS) for $31 million. The deal, to be closed over a period of three years, was funded through a combination of
internal accruals, debt and equity, details of which were not disclosed by company executives.

With this acquisition, Apollo Health Street expects to get a foothold in the US revenue cycle management space that is one of the major markets for the Hyderabad-based
company. AFS is responsible for receivables management of $1 billion annually. In the medium term, Apollo Health Street expects to be one of the top three revenue cycle management companies in the United States.

Valuewise, Apollo Health Street has set an ambitious target of $100 million revenue in the next 18 months from $45 million in a year. The employee strength would surge to 2,000 in 12 months and 3,750 in 18 months, company officials said. AFS is expected to contribute approximately $26 million in revenues to Apollo Health Street.

Additionally, Apollo Health Street is looking at 2 more acquisitions and talks are underway. The two companies are US-based and fit the Apollo Health Street bill of a company complimentary in nature with an annual growth rate of 15-20 per cent and a diversified customer base. Acquisitions will drive 50-60 per cent of the company’s overall revenues in the next 2 years.

Meanwhile, a listing for AHS is not ruled out, Ms Sangeeta Reddy, managing director of Apollo Health Street, said. “An Indian listing may happen down the road and a Nasdaq listing may happen after Apollo Health Street crosses the $200 million mark,” she said.
Ms Reddy also added that apart from the current bases in Hyderabad and Delhi Apollo Health Street was exploring the option of a facility in Chennai.