Wockhardt sells animal health unit to French company

Written by fe Bureau | Mumbai | Updated: Jun 30 2009, 04:35am hrs
Troubled pharma major Wockhardt Limited, which is battling a mounting debt of over Rs 3,700 crore, said it is selling its animal health division to French company Vetoquinol for an undisclosed amount. Sources, however, say that the deal for the division, which had a net sales of Rs 77 crore for the year ended December 31, 2008, was finalised at Rs 170 crore.

Wockhardt, which had earlier said it will exit non-core businesses, two weeks ago sold its German business Espharma to Mova GmbH, a subsidiary of Lindopharm GmbH, Germany, for an undisclosed amount. In March this year, Wockhardt decided to restructure its corporate debt by making a reference to the corporate debt restructuring (CDR) cell through its banker ICICI Bank Ltd.

Vtoquinol, an independent veterinary pharmaceutical laboratory serving both the companion animal and livestock markets, is the 11th largest laboratory in the world. As much as 80% of Vtoquinols revenues come from outside France.

For Wockhardt, this initiative to divest its non-core business is a step towards its continued growth plan and a firm focus on its core human pharmaceutical business, a company statement said. The transaction is subject to the receipt of the necessary administration approvals, and should take effect in the second half of 2009, it added.

Wockhardt is in talks to divest a controlling stake in its hospital group, Wockhardt Hopsitals, and Delhi-based Fortis is reportedly to be in the front-runner for acquiring the stake. Earlier, Apollo Hospitals had officially dropped plans to buy them due to differences in valuation. Wockhardt has kept hospitals in three citiesMumbai, Bangalore and Kolkataon the block.

According to rating and advisory firm Crisil, as on December 31, 2008, Wockhardts debt has risen to Rs 3,777 crore, whereas the same was Rs 2,910 crore a year ago. Wockhardt Ltd has Rs 550 crore worth of foreign currency bonds due for redemption in October. The original conversion price was set at Rs 486 per share. On Friday, June 26, Wockhardt shares closed at Rs 142.40 on the Bombay Stock Exchange. On March 13 this year, days before the company referred to the CDR cell, shares touched their 52-week low of Rs 67.50.

Habil Khorakiwala and his family, who holds 75% in the company, has also pledged 40% shares in Wockhardt to financial institutions including IL&FS to raise around Rs 350 crore.