Aurobindo acquires US firm Natrol for Rs.814 crore

Emerges as the winning bidder in the bankruptcy auction for the company; Plans to foray into nutraceuticals business through the acquisition

Hyderabad: In a significant development, city-based Aurobindo Pharma Limited has acquired US-based nutritional supplement maker Natrol Inc for $132.5 million (nearly Rs 814 crore) through its US subsidiary. The acquisition, made by participating in a bankruptcy auction for the Natrol, is expected to help the company to diversify into nutraceutical segment in the American and other global markets.

“On November 10, 2014, Aurobindo Pharma Limited’s 100 per cent subsidiary, Aurobindo Pharma USA Inc., emerged as the highest bidder for the acquisition of Natrol Inc and other affiliate entities, under a process to be finally approved by the United States Bankruptcy Court for the District of Delaware,” Aurobindo said in a statement.

Under the auction process, Aurobindo emerged as the best bidder with a bid amount of $132.5 million to acquire the assets of Natrol with an agreement to take on certain liabilities.

Natrol filed for bankruptcy in June this year with the US Bankruptcy Court. The company was put up for auction on November 10 with a base price of around $90 million and Aurobindo USA won the bid. According to reports, Natrol stated its bankruptcy petition that it had assets of about $500 million and liabilities up to $100 million.

Aurobindo USA is of firm belief that Natrol is an excellent strategic fit as it provides the right platform for creating a fully-integrated OTC (over the counter) platform in the US and other international markets. The company is betting on the Natrol’s strong brand reputation, presence in a variety of attractive supplement markets and existing relationship with key distribution as well as retail partners, for its foray into nutraceuticals.

According to Aurobindo officials, the acquisition, which is subject to final approval by the US Court and other statutory approvals, is likely to be completed by the middle of next month. The company will fund the acquisition through internal accruals as well as debt.

The acquisition received thumps-up from Angel Broking which described the move as a reasonable on valuation front. “On the funding part, Aurobindo can easily fund the same as the company has comfortable debt: equity ratio of 1:1,” said Sarabjit Kour Nangra, Vice President- Research (Pharma), Angel Broking, in a report.

Natrol, a unit of Plethico Pharmaceuticals Ltd of India, is based in California, US. Plethico acquired it for about $82mn in October 2007.

“Given the size of the Aurobindo, the acquired company will be form around 4-6 per cent of its FY-16 sales and profitability front. Thus, the acquisition overall will not have a major impact on the numbers, but provides the company an entry into a potential high growth markets,” Ms Nangra said.