Aurobindo Pharma, on Saturday, announced that it had signed up an agreement to acquire the loss making commercial operations of the Dublin based Actavis PLC in seven western European countries. The cost of acquisition is 30 million euro, and it will be funded through internal accruals. The company expects to see a turnaround in the current loss making operations of Actavis through its vertically integrated platform. “Although these businesses are currently loss-making, Aurobindo expects them to return to profitability in combination with its vertically integrated platform and existing commercial infrastructure,” Aurobindo stated in a filing to the BSE.

Closing of the transaction is conditional on certain antitrust approvals and completion of employee consultation processes, according to a disclosure of the company. As per the binding offer agreement, the personnel, commercial infrastructure, products, marketing authorisations and dossier license rights in the seven locations are expected to be acquired by Aurobindo.

“The acquisition expands Aurobindo’s front-end operations into five segments — generics, prescription products, over-the-counter products, hospital products and generics tenders — with about 1,200 products and an additional pipeline of over 200 products,” the disclosure stated. Net net sales of the acquired businesses would be around euro 320 million in 2013 with a 10 per cent growth year-on-year, according to an estimate of Aurobindo management.

Commenting on the move, Arvind Vasudeva, CEO of Aurobindo Formulations Business, said the acquisition proposal was carefully reviewed, and the company could significantly capitalise on the Actavis’ strong market position.

Actavis President Sigurdur Oli Olafsson said this transaction would permit Actavis to focus management time and resources to support accelerated investment in driving faster growth of other markets.

The cost of acquisition is

30 million euro which will be

funded through internal accruals