Orchid to sell its penicillin business to Hospira; shares up 1%

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oi-Sneha

By Sneha B K

Updated: Thursday, August 30, 2012, 10:21 [IST]

Orchid Chemicals and Pharmaceuticals Ltd will sell its penicillin and penem business to US drug maker Hospira for about US $200 million. This deal will help the company to de-leverage its debt position and fund new growth plans.

Orchid Pharma, the pharmaceutical division of Orchid Chemicals and Pharmaceuticals, said on Wednesday that it had entered into a business transfer agreement (BTA) with Hospira for the sale and transfer of Penicillin and Penem API business and the API facility located in Aurangabad (Maharashtra) together with an associated process R&D infrastructure in Chennai.

"This business transfer agreement with Hospira will help us fast track our future growth while maintaining a healthy debt profile in our balance sheet. Given the current scenario, it is a prudent decision for Orchid to monetize these verticals and bring in cash to de-leverage its debt position and fund newer growth horizons," K Raghavendra Rao, CMD, Orchid Chemicals said.

This business transfer agreement also demonstrates Orchid's ability to build value in itschosen product domains and successfully monetize them to create value for the stake holders, company said in the statement.

Approximately 830 employees would be transferred to Hospira as part of the business transfer.

The shares of the company was seen trading higher by 1.03% at Rs 112 at 10.00 am IST. It touched intra-day high of Rs 117 and intra-day low of Rs 110.

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