Bangalore-based Strides Arcolab has sold 94 per cent shareholding in Ascent Pharmahealth, its subsidiary with operations in Australia and Southeast Asia, to NYSE-listed Watson Pharmaceuticals for AU$ 375 million (Rs 1,960 crore).

Strides Arcolab in its filling to Bombay Stock Exchange said it sold its 94 per cent stake in its subsidiary, Ascent Pharmahealth Limited, which has operations in Australia and Southeast Asia. Watson Pharmaceuticals also acquired the remaining 6 per cent shareholding associated with Ascent, CEO, Dennis Bastas.

Ascent is among the top five generic pharmaceutical companies in Australia.

About the transaction, Arun Kumar, executive VC & group CEO of Strides Arcolab, said, “The sale of Ascent is a value enhancing and forward-looking initiative for Strides. We’ve been clear about our intention to focus on our highly attractive steriles segment, which we expect to be our growth engine going forward.”

As a result of the acquisition, Watson becomes the fifth largest generic pharma company in Australia based on revenue, and the combined firm will be the second largest in terms of total molecules. Watson also becomes the largest generics firm in Singapore and gains an established commercial base in Malaysia, Hong Kong, Vietnam and Thailand.

Analysts at ICICI Direct said, “As per our estimates, the annual sales of Ascent Pharmahealth would be around AU$150 million with earning before interest tax depreciation and amortisation (EBITDA) margins of 15 per cent. The deal works out to 2.5 times of sales and 17 times of EBITDA. The sale would help strengthen the balance sheet by reducing the high leverage.”