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Arkray Group To Acquire IVD Business Of Span Diagnostics For
Rs.100 Crore
Indian arm of Japanese medical technology leader, US$ 700-mn Arkray Group will
acquire the In-Vitro Diagnosis (IVD) business of Gujarat-based Span Diagnostics
Ltd (Span). The enterprise value of the transaction is estimated to be around
Rs.100 crore.
A meeting of the board of directors of Span, India's leading manufacturer of
diagnostic products and a major supplier of HIV test kits for the National AIDS
Control Programme, last evening (January 23), approved the transfer of its
business undertaking, as a going concern comprising In-Vitro Diagnostics (IVD)
business on a slump sale basis to Arkray Healthcare Private Limited, the Indian
arm of Arkray, Inc. The board also approved the sale of Span Diagnostics’
ownership interest in its relevant subsidiary.
Subject to the requisite approvals, including a shareholder approval via postal
ballot and the satisfaction of conditions precedent, the transaction is expected
to close within approximately three to four months.
“What is most interesting about the deal is that it will unlock the potential of
India’s medical devices sector in general and booming in-vitro diagnostic
industry in particular. IVD market is currently worth Rs.2000 crore and forms
just below 3 per cent of the healthcare market, but offers greater space for
growth,” said Mahesh Singhi, MD of Singhi Advisors, who were the exclusive
financial advisors to Span Diagnostics.
“Besides giving a big boost to the FDI story in the domestic healthcare sector,
it is also a trend-setting transaction in the Indo-Japanese corridor,
reaffirming that many Japanese players are keen to enter India if they get the
right opportunities,” he added.
Mizuho Securities represented Arkray in the transaction. Wadia Ghandy and Vaish
Associates acted as legal advisors to the seller and buyer respectively.
The deal, bringing together the synergies on both the sides, will reaffirm
Arkray Healthcare as the leader in the IVD market which is growing 15 per cent
annually and is expected to keep the pace for at least another five years. The
IVD reagent market size is pegged at Rs.700 crore and the IVD Instruments market
size is worth Rs.1400 crore.
“We welcome this transaction as it provides our customers, suppliers, employees
and other stakeholders an opportunity to leverage upon the additional technical,
financial and marketing strengths of Arkray Healthcare, while unlocking
significant shareholder value” said Dr. Pradip Desai, founder chairman and
whole-time director of Span Diagnostics.
"This strategic action will advance Arkray Healthcare into the leading position
in India, one of the world’s most rapidly growing markets with potential for
further expansion," said Takeshi Matsuda, president & CEO, Arkray, Inc.
"Our strong position in Japan and growing presence in emerging markets is part
of our ongoing diversification and expansion strategy, complementing our
state-of-the-art offerings in developed markets. At the completion of this
transaction, Arkray Healthcare will have an enhanced product portfolio as well
as sales channel and domain skills, which will strengthen our market position”
he added.
Kyoto-based Arkray, one of Japan’s leading companies in the area of in-vitro
diagnostics, is engaged in research, development, manufacture, service and
distribution of in-vitro diagnostics products. Arkray, Inc is one of the world’s
leading companies manufacturing glyco-haemoglobin A1c test device, automatic
analyzer for urine testing, blood glucose device for self monitoring and other
wide ranged product lines and supplying them to over 80 countries worldwide.
Singhi Advisors is an independently owned, well researched and proactive global
investment banking firm, providing result oriented services in mergers &
acquisitions (M&A) and capital raising for last two decades. With a team of over
40 aggressive & experienced professionals working across six offices in India,
Australia & Mauritius, Singhi Advisors has an enviable track record of closing
over 100 prestigious domestic and international transactions in last five years,
valued over US$ 4.2 billion, in 18 unique sub-sectors across 20 countries,
dealing with the global giants.
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