In a deal worth nearly $1 billion, online pharma startup PharmEasy is buying out leading pathology laboratory chain Thyrocare Technologies to bolster its e-commerce play. Under the contours of the deal, API Holdings, the parent of PharmEasy is acquiring a 66% stake in Thyrocare from its main promoter A Velumani and his family for Rs 4,550 crore.
At the same time, the pharma retailer’s parent is also making an open offer to acquire an additional 26% from public shareholders for Rs 1,788 crore, a release from the two companies said.
As part of the deal, Velumani, who had started the company with an initial capital of just Rs 2 lakh, will now acquire a minority stake of less than 5% in API Holdings. Under the current valuations, the deal is worth about $925 million or around Rs 6,900 crore.
This is the second high-value deal in India in which a startup is buying out an established brick-and-mortar company, and the first where a unicorn (valued at over $1 billion) is buying a listed firm. Earlier this year, edtech major Byju’s had announced the acquisition of unlisted Aakash coaching classes for about $950 million.
API Holdings and its associates are making an open offer to Thyrocare’s shareholders at Rs.1,300 per share. This is the second acquisition for PharmEasy this year. In April the company acquired its smaller e-pharma competitor Medlife for an undisclosed amount.
Velumani, CMD of Thyrocare, said that Covid fast-tracked growth for both the company and the industry. In the last one year or so, Thyrocare’s turnover grew 20% and its ebitda (gross profit) went up around 40%. “From ordering medicines online to tele-consultations and now diagnostic services, there is a shift not only in consumer preferences but also the business approach and modus operandi by doctors, hospitals, pharmacies and clinics across the country. This (Thyrocare-PharmEasy) unified model will soon be followed by others,” Velumani said, adding I wanted to retain some part (of our share), but the acquirers were keen to buy out completely.
In this deal, Nomura was the adviser to the promoters of Thyrocare, while JM Financial and Kotak Mahindra Capital Company were the advisers to API Holdings.