India has privately raised objections to Chinese firm Shanghai Fosun Pharmaceutical Group’s proposed $1.3 billion takeover of Indian drugmaker Gland Pharma, a source familiar with the matter said on Monday. The deal has won the approval of the Competition Commission of India (CCI) and India’s Foreign Investment Promotion Board (FIPB) in the last few months, but some in the government have expressed concerns, the source said, declining to be named. Chinese authorities have approved the takeover of the injectable drugmaker, but it is awaiting a nod from the Cabinet Committee on Economic Affairs of India, Shanghai Fosun said in a statement to Reuters. The closing of the deal, which would be China’s largest ever acquisition in India if approved, has now been extended to Sept. 26, the company added. Shanghai Fosun Chairman Chen Qiyu said in a filing to the Hong Kong bourse on Tuesday that India had not informed Gland Pharma of the result of its review of the acquisition.
Private-equity backed Gland Pharma and the cabinet committee, chaired by Indian Prime Minister Narendra Modi, did not immediately respond to requests for comment on Monday. Based in the southern Indian city of Hyderabad, Gland owns four factories from where it supplies a variety of injectables – widely used medicines administered through vials, syringes, bags and pumps, which are harder to make than regular drugs. Bloomberg, citing people familiar with the matter, reported earlier in the day that the cabinet committee was poised to block the deal, though neither company had been formally notified of the move yet.
India’s Finance Ministry spokesman D.S. Malik told Reuters that report was “totally speculative” and that the matter had not yet come before the committee. The objections come against a backdrop of heightened India-China tensions. The two countries are embroiled in a stand-off around India’s north eastern border. India’s concerns over the Gland-Fosun deal are not, however, a result of the border tensions, the source said. “They have more to do with giving control of a large pharma company to a Chinese entity that itself is facing questions from the regulators at home,” the source said. China’s banking regulator has ordered a group of lenders to assess their exposure to offshore acquisitions by a handful of companies, including Fosun, that have been on an overseas buying spree, sources told Reuters last month.