Ranbaxy Fine Chemicals Ltd., or RFCL, part of ICICI Venture controlled firm, believed to be a strong aspirant to acquire the specialty chemicals business of Mallinckrodt Baker, a division of healthcare giant Covidien, the media reported.
Industry sources said in a statement that the deal could fetch Mallinckrodt Baker around $450 million, adding that the transaction is in the final stages of due diligence and could be finalized in around two weeks. The international deal is over four time RFCL's current size.
The report said that the acquisition follows the speculation about RFCL's desire to buy a large US acquisition. In case the deal materializes, it will be the biggest overseas M&A deal for ICICI Ventures. ICICI Venture acquired RFCL around four years ago from Ranbaxy Labs for Rs.125 crores.
The release stated that the acquisition would place the company in an enviable position in consolidating itself in the global fine chemical industry, especially in the laboratory products space. RFCL has three divisions, namely, animal healthcare, fine chemicals and the diagnostics business.
In February 2008, the $10 billion Covidien, formerly Tyco Healthcare, revealed its plans to divest its specialty chemicals business, so that it could divert it's attention more on developing medical devices and imaging solutions.
An analyst reportedly indicated that Mallinckrodt Bakers was an attractive fine chemicals business with a steady operating margin and limited ongoing investment requirement.
Mallinckrodt Bakers Chemicals has over 2,000 employees with four plants in the US, the Netherlands, Mexico and Malaysia. It supplies chemicals for laboratory research, microelectonics devices, pharmaceuticals and biotechnology therapeutics. It has reported revenue of $422 million for the fiscal year 2007.
By the by, in 2003, RFCL and Mallinckrodt Baker had a marketing tie-up for scientific laboratory products in the Indian market. It is understood that RFCL has been chasing a few acquisition targets in the US, with YES Bank roped in as an advisor for potential transactions.
RFCL had small acquisitions last year, commencing with the acquisition of Wipro BioMed, Godrej Diagnostics and Alved Pharma & Foods in veterinary healthcare.
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