A day after Wockhardt decided to sell its nutritional business, including Farex, Dexolac, Nusobee and Protinex brands, to French food major Danone for Rs 1,750 crore, investors on Wednesday gave the deal a thumbs-down as the debt-ridden drug maker’s shares fell 4%, or Rs 18 points, to Rs 441 on the Bombay Stock Exchange.
Wockhardt said that the deal would help the company to focus on its core business of drug manufacturing. The French group, however, said the strong brand awareness of Wockhardt would accelerate its entry into the Indian market.
In 2009, Wockhardt had to withdraw plans to sell the nutrition business to Abbott Laboratories as some of its creditors opposed the deal on valuation. However, it continued attempts to sell the business.
Wockhardt had reported a revenue of Rs 1,750 crore during 2010-11. “Wockhardt is re-inventing itself by taking fundamentally strong and positive steps with a firm focus on its core human pharmaceutical business,” said the company in a press release.
Shares of the company opened firmly in the initial trade and touched intra-day high of Rs 471 and then gradually declined during the day.
“The investors are apprehensive about the deal,” said Sapna Jhawar, pharma analyst, Sharekhan. “They are not sure whether the deal will happen,” she added.
“The deal is positive for the company as it will now be able to concentrate on its core business and also the cash available will help to reduce debt burden,” said a pharma analyst of Mumbai-based brokerage house.
The company has a debt of around Rs 3,000 core. According to industry estimates India’s infant nutrition market is growing at 20-25 % every year.