Wockhardt Abbott nutrition deal

Wockhardt and Abbott have jointly decided to terminate the nutrition business agreement signed by them in July 2009, was the terse one line communication from drug-maker Wockhardt.

But Abbott was more telling in its response, on why the estimated Rs 625-crore deal to buy Wockhardt's nutrition business fell through. “The deal was terminated because Wockhardt was unable to resolve debt restructuring issues with some of its lenders,” Abbott spokesperson, Mr Scott Stoffel, said in his response to queries from Business Line.

The deal had always been under a cloud since the debt-ridden Wockhardt had been hauled to the court by overseas lenders, who even filed wind-up petitions against the company.

Their contention was that Wockhardt's debt restructuring exercise was “one-sided” and that they had not been taken on board. Though Wockhardt had maintained otherwise, the clutch of overseas lenders had also asked the Indian courts to not allow the sale of Wockhardt's nutrition business.

Abbott's agreement last year was to acquire Wockhardt's nutrition businesses, Carol Info Services Limited, and certain Wockhardt subsidiaries, and the deal stood terminated, Abbott said, adding however, that they remained committed to nutrition in India.

Wockhardt's nutrition business comprised brands such as Protinex and Farex, which had come into its stable through the acquisition of Dumex India Pvt Ltd in 2006, when Wockhardt was in the thick of a buying spree. The two brands, each with a 50-year brand-equity, had clocked sales of Rs 60 crore, Wockhardt had then stated.

Wockhardt's Debt

With a debt of about Rs 3,700 crore, Wockhardt had decided to undertake a corporate debt restructuring exercise last April. As part of the process, Wockhardt had also stated its intention of selling its non-core businesses. In June last year, Wockhardt sold its animal health and German businesses within 10 days of each other. The Rs 77 crore animal health business was sold to French company Vetoquinol for about Rs 170 crore and the German Esparma was sold to Lindopharm for Rs 120 crore.

India and Abbott

Meanwhile, the Abbott spokesperson added that India was an important growth market for nutrition and that “we will continue to explore strategies to advance our business there. We are continuing to make investments in all aspects of our operations in India and plan to introduce many of our global nutrition products to Indian consumers.”

Wockhardt shares were up, over three per cent, at Rs 143 on the BSE.

Source: http://www.thehindubusinessline.com/2010/04/02/stories/2010040251600300.htm