Khaitan & Co acted as domestic legal counsel and Troutman Sanders as international counsel to Fosun Pharma, which on 3 October completed its acquisition of a majority stake in Gland Pharma.
The acquisition is the largest overseas acquisition by a Chinese pharmaceutical company and the largest acquisition of an Indian company by a Chinese buyer.
When the deal was initially announced, in July 2016, the Chinese pharmaceutical company was to acquire all the shares of Gland Pharma owned by US private equity investor KKR and shares of its other shareholders. Cyril Amarchand Mangaldas (CAM) was domestic legal counsel and Simpson Thacher & Bartlett was international counsel to KKR and Gland Pharma.
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The Chinese pharma company had agreed in July 2016 to acquire an 86.08% stake in Gland Pharma for US$1.2 billion, but faced with a failure by the Indian government to consider and clear the deal, it had to settle for a 74% stake valued at US$1.1 billion.
India allows up to 74% foreign direct investment in brownfield pharma under the automatic route. As such, the Cabinet Committee on Economic Affairs, to which the Foreign Investment Promotion Board (FIPB) had referred the Chinese company’s acquisition, did not need to provide its approval.
In a statement issued in July 2016 Fosun Pharma said that the deal would enable it “to further explore the international market by leveraging Gland Pharma’s research capability and India’s preferential policies upon generic drugs”.
Partner Niren Patel, who led Khaitan & Co’s team, told Asia Business Law Journal that the transaction posed “many unique legal challenges”. This included getting approvals across jurisdictions, “implementing multiple transaction structures contemporaneously, including share purchase, share subscription and buyback of shares”, and liaising with numerous Indian regulatory authorities. Patel said a further challenge was “negotiating and finalizing inter-se shareholder rights with the remaining shareholders of Gland Pharma … to give sufficient comfort to the continuing shareholders whilst ensuring buyer’s commercial interests do not stand compromised”.
Khaitan & Co’s core transaction team comprised principal associate Vivek Sriram, senior associate Vidur Sinha, senior associate Niharika Mepani and associate Suditi Surana. Partner Avaantika Kakkar and senior associate Kirthi Srinivas assisted on obtaining merger approval from the Competition Commission of India, which gave its approval in December 2016. Associate partner Atul Pandey and associate Hirak M assisted in Foreign Investment Promotion Board related aspects. Associate director Vinita Krishnan and senior associate Raghav Bajaj assisted on tax-related aspects.
Troutman Sanders partner Chengfei Ding, based in its Shanghai office, and associate Isabelle Yi Wu, in its Hong Kong office, advised on the transaction. Simpson Thacher & Bartlett’s team comprised Hong Kong-based partners Kathryn Sudol and Ian Ho, and associate Shannon Itoyama.
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