Merger Of Torrent Pharmaceuticals With JB Chemicals: En Route To Becoming Second-Largest Player In Pharma Industry

INTRODUCTION

On 29 June 2025,¹ Torrent Pharmaceuticals Limited("Torrent") announced a strategic transaction to acquire a controlling stake in J.B. Chemicals & Pharmaceuticals Limited("JB Pharma"), followed by the proposed amalgamation of JB Pharma into Torrent ("Deal"). Both companies are engaged in the manufacturing and marketing of pharmaceutical products, and the transaction is aimed at strengthening Torrent's scale, product portfolio, and market presence. The deal is currently subject to receipt of shareholder and applicable statutory approvals.

TRANSACTION STRUCTURE OF THE DEAL²

1. Pursuant to the share purchase agreement dated 29 June 2025, Torrent will acquire 46.39% of the equity share capital from Tau Investment Holdings Pte. Ltd., the promoter of JB Pharma (an entity of the US private equity firm Kohlberg Kravis Roberts & Co. ("KKR"), at a consideration of approximately USD 1,394 million.
2. Torrent also proposes to acquire up to 2.47% of JB Pharma's fully diluted equity from employees upon exercise of their vested Employee Stock Option Plans.
3. Following the acquisition of employees shares, Torrent will make a mandatory open offer to acquire up to 4,17,45,264 equity shares, representing 26.00% of the expanded share capital of JB Pharma, from the eligible public shareholders of JB Pharma.
4. Upon completion of the acquisition and open offer, JB Pharma is proposed to be amalgamated into Torrent pursuant to a scheme of amalgamation³ under Sections 230 to 232 of the Companies Act.

REGULATORY APPROVALS

The Deal has so far received the approval of CCI on 21 October, 2025; however, a detailed order is yet to be uploaded.⁴ Further, the no-objection letters from SEBI, as well as approvals from NCLT and the shareholders, are still pending.

Further, it is to be noted, that although schemes of amalgamation of listed entities ordinarily require approval of the majority of public shareholders through e-voting, the present merger qualifies for an exemption, as confirmed by the statutory auditor's certificate issued by B S R & Co. LLP dated 29 June 2025.⁵ Under Paragraph A(10)(a) read with Paragraph A(10)(b) of Part I of the SEBI Master Circular on Schemes of Arrangement 2023,⁶ where a scheme does not involve circumstances such as issuance of shares to promoters or related parties, transactions with promoter-controlled entities, amalgamations involving unlisted companies, etc, listed companies are required to obtain public shareholder approval since they do not involve any such triggering factors; accordingly, it is not required to comply with the obligation to seek separate approval of public shareholders.

OUR THOUGHTS

The USD 1.4 billion Torrent–JB Pharma merger, India's second-largest pharmaceutical deal after Sun–Ranbaxy, reflects a strategic consolidation with significant long-term value creation. The deal will combine Torrent's strong domestic presence⁷ with JB Pharma's global operations, including exports to over 30 countries⁸, its expanding India business, and its international Contract Development and Manufacturing Organisation ("CDMO") capabilities. JB Pharma's strong performance is reflected in a 19% increase in net profits in FY 2024–25⁹. The Deal is also expected to strengthen Torrent's position in chronic therapies and enable its entry into the ophthalmology segment. In this context, JB Pharma holds several key licences, including ten trademark licensing agreements for ophthalmology brands with Novartis Innovative Therapies AG. All such licences, together with the related intellectual property, will automatically transfer to Torrent upon completion of the scheme of amalgamation. From a private equity perspective, the Deal stands out as a major success for KKR. KKR acquired a controlling stake in JB Pharma through its indirect holding, Tau Investment Holdings Pte Ltd in 2020. Market estimates suggest that KKR's eventual exit to Torrent will generate returns of more than five times its original investment, with a gross internal rate of return of about 36% over a four-year holding period. This KKR exit is another successful bet in India's fast-growing healthcare sector and further strengthens KKR's strong exit track record in India, following earlier high-profile deals such as Max Healthcare.

Footnotes

1 Torrent Pharma Press Release: https://www.torrentpharma.com/assets/Torrent_Pharma_Press_Release_29_6_25_8146831bae.pdf

2 SE Intimation by Torrent Pharma (can be accessed here at Microsoft Word – SE intimation reg 30)

3 Scheme of Amalgamation (can be accessed here at 1_Scheme_of_Amalgamation_7da94ef9b9.pdf)

4 PIB Press Release by Competition Commission of India (21 October, 2025) (can be accessed here at https://www.pib.gov.in/PressReleasePage.aspx?PRID=2181329®=3⟨=2)

5 Auditor's Certificate (29 June, 2025) (can be accessed here at 11_Statutory_Auditor_Certificate_Non_Applicability_9740db3448.pdf)

6 SEBI Master Circular (June 20, 2023) can be accessed here at https://www.sebi.gov.in/legal/master-circulars/jun-2023/master-circular-on-scheme-of-arrangement_72839.html)

7 J.B. Chemicals & Pharmaceuticals Ltd., Letter of Offer (can be accessed here at J.B. Chemicals & Pharmaceuticals Limited – LOF_p.pdf).

8 Exports information (can be accessed here at J.B. Chemicals & Pharmaceuticals Limited – LOF_p.pdf)

9 Net profits in FY 2024–25 (can be accessed here at J B CHEMICALS AND PHARMACEUTICALS LTD.: Latest Quarterly Results Analysis – ICICI Direct)

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