An Indian drug maker Cipla Ltd has agreed to acquire 51% equity stake in Uganda’s Quality Chemicals Ltd (QCL) for $30 million [about Shs 90 Billion] in tranches from its existing shareholders, it said on Friday.
The deal, which is expected to be completed by the end of July this year, is routed through a wholly owned subsidiary Cipla (EU) Ltd, UK.
As per the definitive agreement signed by the two companies, Cipla will make an upfront payment of $8 million on completion and five equal installments of $4.41 million payable at annual intervals thereafter.
Incorporated in 1997, QCL imports and distributes pharmaceutical and consumer products. For the financial years 2012, 2013 and 2014, the turnover of QCL was UGX15.76 billion ($5.28 million), UGX17.02 billion ($5.71 million) and UGX14.85 billion ($4.98 million), respectively.
QCL also owns a 22.05 per cent equity stake in Cipla’s subsidiary in Uganda, called Cipla Quality Chemical Industries (CQCIL). Following the acquisition of QCL, Cipla’s effective holding in CQCIL will rise to 62.3 per cent from existing 51.05 per cent.
“The transaction has been done at around 12x market cap/sales, which is on the higher side, though given the balance sheet of the company can be easily funded,” said Sarabjit Kour Nangra, vice president (research) – pharma at Angel Broking.
Quality Chemicals Ltd is Uganda’s leading life-sciences products company, established in 1997 to import and distribute high quality and affordable products in the fields of Human Health, Animal Health and Environmental and Public Health.
The company has been very successful at marketing and distribution of a wide range of health commodities used in human and animal care.
Quality Chemicals was the pioneer company in the distribution of Mosquito nets and Antiretrovirals on the Ugandan Market. QCL also spearheaded the private sector participation in the Roll Back Malaria Initiative in Uganda.