Dubai Investments said yesterday that it generated about Dh385 million from the sale of a stake in a drugmaker to Sanofi.
Under the deal, announced on Thursday, Dubai Investments (DI) divested 66 per cent of its stake in Globalpharma, a generic drugmaker. The profit from the transaction, and the fair value gain on the remaining stake is together valued at Dh450m. The profit will be reflected in DI’s second quarter results, the company said in a stock exchange filing.
DI shares closed 0.7 per cent lower yesterday at Dh2.94 each.
“With this partial divestment, among the first in the Middle East generic drug market, we would expect this transaction to set the stage and attract more international firms to take a serious look at the region after a heavyweight like Sanofi has made this significant commitment,” said Shailesh Dash, the chief executive of the Dubai-based Al Masah Capital. “Company buyouts where full ownership is transferred are not as common in the region as businesses are typically still majority-owned by and operated by families, which increases the tendency to want to keep control of the business.”
DIC does not disclose profit figures for Globalpharma separately. “We cannot compute what multiple the company was sold for exactly but we would expect that the multiple it was sold for would not be too far off from what comparable companies are now trading at in the market,” Mr Dash said.
Last week, DI said it received an internal rate of return of 26 per cent over a 10-year period on the Globalpharma deal. Globalpharma signed a deal last month with Sanofi to manufacture some of its generic medicines in the UAE. With the sale, the French company will manage Globalpharma.
Paris-listed Sanofi closed at €77.74 on Friday, an increase of 0.06 per cent, down from its yearly high of €80.87 in July.
Sanofi had been eyeing investments in emerging markets such as India, China, Vietnam and Colombia. The Middle East and Africa contributed €486m (Dh2.43bn) in sales in the first quarter, while the rest of Asia contributed €734m. That figure was similar in Latin America. The United States remains its largest market with €2.41 billion in sales. Sanofi generated total sales of €7.84bn during the quarter.
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