Aurobindo Pharma 100% subsidiary, Aurobindo Pharma USA Inc. (Aurobindo USA) emerged as the highest bidder for acquisition of nutritional supplement maker, Natrol Inc. and other affiliate entities (Natrol), under a process to be finally approved by the United States Bankruptcy Court for the district of Delaware.

Under the auction process, Aurobindo USA emerged as the highest and best bidder with a bid of USD 132.5 million to acquire the assets of Natrol with an agreement to take on certain liabilities. Earlier during the year, Natrol Inc filed for bankruptcy on Wednesday, a day after a U.S. judicial panel consolidated several class actions accusing the health supplement maker of false marketing of its joint relief products.

Commenting on the same Sarabjit Kour Nangra, vice president research- Pharma, Angel Broking said, "On the valuation front, given that the Natrol has been reported to have a overall debt of USD 69 million, the company has been acquired at around ~2xEV/sales, which is reasonable. On the funding part, the company can easily fund the same, as the company has comfortable Debt: Equity of 1:1.

The acquisition is subject to final approval by the US Court and other statutory approvals as may be required, including any termination of the waiting period or approval under the HSR Act, and closing conditions as per the Asset Purchase Agreement. Management expects the acquisition to fully reflect in the FY2016, and will get completed by December'2014. Thus we raise the FY2016E sales and net profit numbers by 4.4% and 5.1% respectively. Thus sales for FY2016 now stand at Rs 140.54 billion from Rs 134.63 billion earlier, while the EPS stands upgraded to Rs 56.3 from Rs 53.5 earlier. We remain neutral on the stock."

Disclaimer: IRIS has taken due care and caution in compilation of data for its web site. Information has been obtained by IRIS from sources which it considers reliable. However, IRIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. IRIS especially states that it has no financial liability whatsoever to any user on account of the use of information provided on its website.