Pharmaceutical company Natco to acquire $226 million share in South African drug manufacturer Adcock Ingram
Indian Pharmaceutical Giant Natco Pharma Expands into Africa with Adcock Ingram Acquisition
Indian pharmaceutical company Natco Pharma Ltd has announced its acquisition of a 35.75% stake in South Africa's Adcock Ingram Holdings Ltd, marking a significant step in its global expansion strategy. The deal, valued at around ZAR4 billion (roughly USD 226 million), will see Natco establish a substantial minority shareholding in Adcock Ingram, one of the biggest pharmaceutical and healthcare companies on the African continent.
The acquisition positions Natco alongside Bidvest Group Ltd, which will retain a 64.25% stake in Adcock after the deal. The combined entity aims to support Adcock Ingram as a private South African company, with the goal of strengthening its operations and expanding its presence in the African market.
Financial details of the transaction reveal that Natco offered to buy approximately Rs 2,000–2,100 crore (roughly USD 226–232 million) worth of equity shares, at a price of R75 (South African Rand) per share, equivalent to about USD 4.27 per share. This purchase will involve around 51.6 million equity shares, increasing Natco’s total stake from a prior 0.80% to 35.75% of the paid-up equity share capital in Adcock.
Adcock Ingram's financial performance for the year through June 2024 shows revenue of approximately $536 million and EBITDA of $78 million. For the six months ended December 2024, revenue was $262 million, with EBITDA at $38 million. The transaction values Adcock at a revenue multiple of 1.12x and an enterprise value-to-EBITDA multiple of 7.83x, as stated by Natco.
The deal is expected to be completed within about four months, subject to regulatory approvals from both the Reserve Bank of India and South African authorities. Upon completion, Adcock Ingram's shares will be bought at a price of 75.00 South African rand each, totaling ZAR4 billion ($226 million).
Natco Pharma, based in Hyderabad, India, has a presence across the globe, including in the US, Canada, Brazil, the Philippines, Singapore, Australia, Indonesia, the Middle East, and South Africa. As part of the acquisition, Natco will set up a subsidiary in South Africa named Natco Pharma South Africa Proprietary Ltd, with an initial investment of Rs 2,100 crore.
Adcock Ingram, established in 1890 as a pharmacy in Krugersdorp, South Africa, manufactures prescription and over-the-counter generic and branded formulations, as well as home care products. The company owns three manufacturing facilities near Johannesburg and 49% of an Indian JV that runs two manufacturing facilities in India.
The acquisition comes at a time when Natco Pharma Ltd is reporting strong financial performance. Profit after tax for the company increased to Rs 1,883.4 crore in 2024-25 from Rs 1,388.3 crore. Additionally, consolidated revenue for 2024-25 was Rs 4,429.5 crore, compared with Rs 3,998.8 crore in 2023-24.
In summary, Natco Pharma’s acquisition of Adcock Ingram aims to strengthen its presence internationally and support the growth of Adcock Ingram as a private entity in South Africa, backed by a substantial investment of roughly Rs 2,100 crore for a 36% stake. The all-cash transaction is expected to be completed by December 2025.
- Having secured a strategic minority stake in Adcock Ingram, Natco Pharma may now venture into investing in the real-estate sector, as Adcock owns properties in South Africa, increasing potential opportunities for business expansion and diversification.
- On the heels of its successful investment in Adcock Ingram, Natco Pharma is now poised to explore other avenues for finance, such as securing loans for further business operations and real-estate development in new markets across the African continent.
