Procter & Gamble will acquire 51.80 per cent stake for Rs 1,289.88 crore in India listed drug firm Merck Ltd as part of a global deal under which it is taking over German firm Merck KGaA's international consumer health business.
The global deal is for about 3.4 billion euro (Rs 27,677 crore) in cash.
P&G will acquire Merck's majority shareholding in Merck Ltd. (India) and make a mandatory tender offer to minority shareholders.
In a regulatory filing, Merck Ltd said Procter & Gamble Overseas India B.V and The Procter & Gamble Company have launched an up to Rs 647.53 crore open offer to acquire up to 4,315,840 equity shares of Merck Ltd, constituting 26 per cent stake from public shareholders.
The open offer document said: "The acquirer (Procter & Gamble Overseas India B.V and The Procter & Gamble Company) has entered into a sale and purchase agreement...wherein it is proposed that the acquirer shall purchase from Emedia Export Company MBH, Merck Internationale Beteiligungen GmbH and Chemitra GmbH 8,599,224 equity shares...which constitutes 51.80 per cent of the voting share capital."
It further said sale of the equity shares held by the sellers is proposed to be executed at a "price of up to Rs 1,500 per fully paid up equity share aggregating to up to Rs 1,289,88,36,000 total for all equity shares held by the sellers payable as Euro equivalent in cash".
The company also said under the open offer by P&G, up to 26 per cent of the fully diluted voting equity share capital will be acquired at a price of Rs 1,500.36 per share amounting to Rs 647.53 crore.
On the impact of the global transaction in India, Merck Ltd said: "As part of the transaction, Merck and P&G have agreed to a number of manufacturing, supply and service agreements."
Merck announced it has signed an agreement to sell its global consumer health business to P&G for approximately 3.4 billion euro in cash, or approximately USD 4.2 billion at current exchange rates.
It said it intends to use the net proceeds from the divestiture primarily to accelerate deleveraging. At the same time, it will allow Merck to increase flexibility to strengthen all three business sectors.
The transaction will be executed through the sale of Merck's shares in a number of legal entities as well as various asset sales and comprises the Consumer Health business across 44 countries, including more than 900 products and two Consumer Health-managed production sites in Spittal (Austria) and Goa (India).
It is contemplated that approximately 3,300 employees, mainly from Consumer Health, will transition to P&G upon completion of the transaction, subject to prior works council consultation where required.
The sale of the global Consumer Health business does not yet comprise the French Consumer Health business, where P&G has made a binding offer to acquire the shares and assets, it added.
The transaction is expected to close by the year end. JP Morgan acted as financial adviser to Merck on the transaction, and Freshfields Bruckhaus Deringer acted as a legal adviser to Merck.
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