InvestorQ : How will the Piramal Enterprises deal for hiving off pharma be structured?
Khushi Patel made post

How will the Piramal Enterprises deal for hiving off pharma be structured?

Dhwani Mehta answered.
12 months ago

Piramal Enterprises will separate its pharma business into a separate listed company, while the financial services business will be merged into the holding company, PEL, along with Dewan Housing just bought by PEL from the NCLT. The pharmaceuticals business will be consolidated under Piramal Pharma Ltd and will include all the pharma related franchises of the Piramal group by merging the two operating subsidiaries of its pharma franchise.

As part of the restructuring, the shareholders of Piramal Enterprises will get 4 shares of Piramal Pharma for every 1 share of PEL held. Of course, their stake in Piramal Enterprises will stay, although the valuation of PEL will get adjusted for the hived off pharma business. The merger of all the financial services business under PEL will allow the company to realize the best benefits of financial services synergies, including the DHFL franchise.

DHFL, however, will not be fully merged into PEL but will remain a 10% subsidiary of Piramal Enterprises. This is also one more step by the company to simplify its group structure. Incidentally, Carlyle is already a PE investor in the pharma business of the PEL group. The promoter stake in Piramal Enterprises and Piramal Pharma will stand at 44% and 34% post the deal. The demerger deal is subject to shareholders, creditors and regulatory approvals.