Family conflict overcasts $7 billion Cipla sale

 Family conflict overcasts $7 billion Cipla sale

Five persons with knowledge of the conversations said that the $7 billion sale plan is in jeopardy due to disagreements within the Hamied family, the company's promoters, about the deal's price and patriarch Yusuf K. Hamied's choice to sell the pharmaceutical company.

The persons, who spoke on the condition of anonymity, indicated that any sale may take longer than expected since the Hamied family has not yet reached a consensus. Some family members have questioned the price of the purchase, which is around 1,200 yen per share, as well as the family's choice to sell the eight-decade-old company.

One of the persons claimed, "A faction of the Hamied family's refusal to agree on pricing has slowed down the deal process."

"The third-generation member of the Cipla promoter group family has not been keen to exit at this stage unless an appropriate premium is offered to their shareholding," the additional individual added.

The first individual claims that Yusuf Hamied's sister Sophie Ahmed and younger brother M.K. Hamied's daughter Samina Hamied, who together control 7.93% of Cipla, are opposed to the purchase.

Samina Hamied choose not to respond to a question. Family relatives of Hamied didn't respond to emails given to them.

Torrent Pharmaceuticals Ltd., located in Gujarat, has expressed interest in acquiring Cipla's promoter holding and taking over the firm, valuing it at more than $1 trillion, according to multiple news sources.

A Hamied family faction has given the investment banking division of Kotak Mahindra Bank Ltd the task of selecting a suitable purchaser.

Sophie, Samina, Rumana Hamied, and Shirin Hamied (M.K. Hamied's wife, who controls 0.79% of the shares) are more in favor of maintaining promoter control than selling for Rs. 1,200 a share, which is a premium of 12.5% over Cipla's six-month average price and a 3.5% increase over Monday's closing price.

Yusuf Hamied, after whom the College of Cambridge named a building in May, cannot decide on his own to give up management of Cipla despite having a sizable 18.68% promoter interest in the company.

All Cipla promoter family members are granted the right of first refusal under a 2017 family agreement that was approved by the Securities and Exchange Board of India (Sebi). This agreement mandates that any Hamied family member looking to sell their shares must first provide them to other members of the group of promoters family before submitting them to any outside party. The parties to this agreement are Samina, the current vice-chairwoman of Cipla, who holds 2.22% of the stock and Sophie Ahmed, who owns 5.71%.

"Some of the important Hamied family members believed that Samina and her siblings would become the new promoter-cum-leaders to run Cipla in a absence of Yusuf or his brother M.K. Hamied starting in 2013 or 2014. They have therefore been taken off guard by the proposal to sell control, the third party said.

M.K. Hamied, who owns 3.46% of Cipla, has never objected to his older brother's financial choices and supports Yusuf's proposal to sell a portion in the company.

Farida Hamied, Yusuf's wife, donated her 5.22% promoter shares to her husband in 2018. Samina, Sophie, and her siblings, Rumana and Kamil Hamied, cite the share transfer as evidence of the Hamied family's cohesion and urge Yusuf Hamied to hand over management of Cipla to the next generation rather than selling it to a third party, according to some of the individuals Mint talked with.

Shirin Hamied and her mother, Rumana, are also unable to support Yusuf's decision to sell his share because of Samina, the source said.

In reality, according to regulatory reports, Shirin, Samina, and the third generation of the Hamied family collectively possess a share in Cipla via a number of firms (i.e., under a single PAN).

"Through such combination promoter groups involving Samina and Sophie, the opposition against the proposed promo interest sale plan has become really strong, enough could have been enough to either stall any purchase or stall the deal," added a different individual.

The Hamied brothers have a philanthropic mindset and want to continue the Hamied family's support of healthcare in developing nations. The elderly Hamied brothers want to ensure that their legacy—the family fortune and the pharmaceutical company—is in good hands moving forward. According to a fourth individual with knowledge of the situation, Yusuf Hamied, who has repeatedly sworn not to sell Cipla during his lifetime, may be considering doing so for this reason.

After Samina was appointed as the company's vice-chairperson in September 2016, a member of the Hamied family claims that Cipla has seen extraordinary development.

Cipla's market value has increased from 47,000 crore to 120 crore since September 2016, and its revenue has increased by over 70%, reaching 22,473 crore in 2022–2023. Samina and Cipla's CEO, Umang Vohra, have been instrumental in the company's expansion, allowing it to compete with Dr. Reddy's Laboratories Ltd. and Sun Pharmaceutical Industries Ltd. in established Western markets as well as India.

The disagreeing part of the Hamied family, according to the persons Mint talked to, may eventually acquiesce to whatever choice the elderly patriarch makes over a promoter sell-off because to Yusuf's widespread reputation.

Vohra stated in an interview with CNBC-TV18 on August 22, 2017, "Cipla hopes to transform itself into a global medical organization with a sharp focus on boosting its presence in the US market," indicating a shift from Cipla's customary focus on markets like Africa, India, and other developing south Asian countries, whose healthcare was revolutionized in the course of the 2000s by its visionary promoter Yusuf's inexpensive life-saving HIV/AIDS drugs and a variety of medicines for canine diseases.

In addition to trying to double US business in five years via innovation and R&D in the US market, Vohra had said that Cipla was looking at China, Brazil, South Africa, and Australia as significant markets. This might lead Cipla to new areas like biosimilars, mRNA technology, and other things.