By Aditya Kalra and M. Sriram
DELHI/MUMBAI (Reuters) - India's Torrent Pharmaceuticals is in talks with private equity funds CVC Capital Partners and Bain Capital to raise up to $1.5 billion to bid for India's Cipla, according to three sources with direct knowledge of the matter.
Torrent and Blackstone are among those interested in acquiring a stake in Cipla, India's third-largest drugmaker by sales, in what could be the biggest pharmaceutical deal ever in India.
Cipla's founding family is willing to sell its 33.4% stake in its entirety, sources say, and any bid will also trigger an open offer for another 26% stake, as per Indian regulations. That translates to a deal of between $6.75 billion and $7 billion, Bernstein estimated in an Aug. 30 report.
Torrent is likely to make a decision to finalize its financial partner in the consortium in the coming days, the first source said.
Bain and Blackstone declined to comment, while Cipla, Torrent and CVC did not respond to comments. The Economic Times first reported CVC's talks with Torrent on Monday.
Cipla also exports medicines to North America and South Africa and sells generic medicines to treat diseases like cold, fever and headaches. It competes with global majors Pfizer and Abbott, among others, in the world's most populous nation, whose pharmaceutical market is expected to reach $130 billion by 2030, up from $50 billion today.
Torrent, whose market capitalization is 54% less than Cipla's $11.9 billion, is present in more than 40 countries and sells drugs related to the diabetes, pain management, gynecology, oncology and anti-infectives segments, according to its site Web.
According to sources, Torrent and Blackstone have submitted non-binding offers for Cipla.
Foreign banks, including Morgan Stanley and Barclays, are also in talks with Torrent to arrange possible debt financing for the deal, the second and third sources said.
Barclays declined to comment, while Morgan Stanley did not immediately respond.
The second source said Cipla is likely more interested in bringing in a strategic partner, such as Torrent, rather than a pure financial investor, although a final decision is not likely to be made soon.
A Bernstein report in August noted possible antitrust scrutiny and a requirement to sell off brands when combined market shares are high. He added that the product overlap between Cipla and Torrent is "manageable" as there were only four overlaps at the molecule level where the "combined sales share would cross the 90% mark."
(Reporting by M. Sriram and Aditya Kalra, additional reporting by Kane Wu; Editing by Bernadette Baum)
