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The proposed all-cash deal involves acquiring nearly 36% of AIHL from minority shareholders. Natco said the strategic investment aims to expand its geographical footprint in South Africa, marking a significant step toward diversifying beyond its key markets.
Founded in 1890, Adcock Ingram operates across four segments—prescription, consumer health, over-the-counter (OTC), and hospital products—with a wide portfolio of branded and generic formulations, critical-care products, and consumer healthcare offerings.
The acquisition is expected to be completed in 2025. Following the deal, Adcock will continue as a private South African entity, with Bidvest retaining 64.25% and Natco holding 35.75%, including its existing 0.80% stake. Post-transaction, Natco will consolidate its share of AIHL’s net profits, which stood at $45 million for the year ended June 2024, on total revenue of $536 million.
“Adcock Ingram is a respected pharmaceutical company with well-recognised brands and a leading position in South Africa. This acquisition gives Natco an established entry into the Southern African market, opens new revenue streams, and strengthens our footprint in a key emerging region,” said Rajeev Nannapaneni, CEO and Vice-Chairman of Natco Pharma.
In addition to the acquisition, Natco’s board approved the incorporation of a wholly owned subsidiary in South Africa with an investment of up to Rs 2,100 crore this year. The move is part of the company’s strategy to enter new geographies for sustained growth and improved profitability.The board also approved a proposal to liquidate its wholly owned subsidiary Time Cap Overseas (TCOL) and directly hold the investment in step-down subsidiary NatcoFarma do Brasil.
Brokerage View
Brokerage firm Nuvama raised its target price on Natco Pharma to Rs 1,110 from Rs 990, while maintaining a ‘Hold’ rating. It believes the Adcock deal strengthens Natco’s presence in emerging markets, supports diversification beyond the US, and improves R&D leverage. The deal is expected to be 7–9% EPS accretive, driven by prescription revenue synergies.
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Nuvama also noted that with Rs 15 billion in post-deal cash, Natco may pursue further M&A opportunities to fuel long-term growth.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
