Shares of Glenmark Pharmaceuticals and Glenmark Life Sciences fell on Friday after the latter was announced to be sold to detergent-to-building materials conglomerate Nirma.

What Happened: Glenmark Pharma on Thursday agreed to sell a 75% stake in its subsidiary, Glenmark Life Sciences, to conglomerate Nirma for ₹5,651.5 crore. The strategic move is part of Glenmark’s focus on core therapies and its commitment to unlocking value to repay debt.

As per an exchange filing, Glenmark Pharma will sell shares of Glenmark Life Sciences at ₹615 apiece, which is at a discount of around 1.8% to its last close of ₹626.20. Following the transaction, Glenmark Pharma will retain a 7.84% stake

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However, Nirma will also make a mandatory open offer to acquire an additional 17.33% of Glenmark Life Sciences from public shareholders at ₹631.20 apiece, which is at a premium to its last close.

In conjunction with this agreement, Glenmark Pharma, its subsidiary, and Nirma have established specific non-compete and non-solicit arrangements for a defined period.

Wh It Matters: Glenn Saldanha, Chairman and Managing Director at Glenmark Pharma, said this move aligns with the company’s strategic vision of evolving into an innovative, brand-focused organization with a commitment to its core therapeutic areas, including dermatology, respiratory, and oncology. He emphasised that the deal offered an opportunity to enhance shareholder value through deleveraging and improving overall returns.

Saldanha also affirmed that the company has no plans to deploy capital, aiming to remain net cash positive. He stated, “The company’s total debt will get extinguished after the deal,” highlighting Glenmark Pharma’s solid financial position.

Saldhana did say the sale would temporarily impact revenue but expressed optimism about achieving double-digit growth within four to six quarters. Furthermore, Glenmark aims to become a major API manufacturer, reducing its reliance on Glenmark Life Sciences for API sourcing.

Price Action: Glenmark Pharma’s share price was down 3.3% at ₹800.65 while Glenmark Life Sciences’ share price had shed 1.5% to trade at ₹616.85 at open on Friday.

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