Laurus Labs' share price rose over 5 percent on Friday after the pharma firm announced that it has acquired a majority stake in Richcore Lifesciences.
In a press filing, the company said, "Laurus Labs has executed Definitive Agreement for the acquisition of majority stake (72.55 percent) in Richcore Lifesciences Pvt Ltd (Richcore)."
Richcore is being valued at Rs 340 crore and the cost of acquisition will be Rs 246.7 crore and will be funded through internal accruals, it added.
Laurus will be acquiring the existing shareholding in Richcore of both Eight Roads Ventures and VenturEast.
The stock price rose as much as 5.6 percent to Rs 308.90 on BSE. In just 2 sessions, the stock jumped over 8 percent.
The current promoters led by Subramani Ramchandrappa will continue to be on the executive board and run the operations. Post successful closure of the transaction, Richcore will be renamed to Laurus Bio Pvt. Ltd.
The transaction is likely to be closed within three months.
"This acquisition marks Laurus Labs' entry into the broader biologics and biotechnology segments, providing the company access to its high growth areas, globally and in India. With this acquisition, Laurus adds a fourth revenue stream to its three existing divisions - API, Formulations and Synthesis," Laurus Labs said.
Richcore is a biotech company based in Bengaluru and develops products critical for biological drugs; it also helps global customers contract research and scale-up their bioprocesses by providing contract research, development, and manufacturing services.
Post the acquisition, brokerage house Motilal Oswal maintained a ‘buy’ rating on Laurus Labs with a target price of Rs 410 per share.
“The acquisition is a step towards building a vertically integrated biotech segment and adds a new lever to growth. It particularly provides capabilities in high growth areas of Recombinant (Rh) Proteins, Enzymes and Biological Contract Development and Manufacturing Organization (CDMO),” the brokerage firm said.
It also raised its FY22E/FY23E EPS estimates by 3 percent.