Dr Reddy’s buys Haleon’s Nicotinell for $632 million

Hyderabad-based Dr Reddy’s Laboratories has announced the acquisition of UK-based Haleon group’s consumer healthcare brands in the Nicotine Replacement Therapy (NRT) category outside of the US, in a cash deal worth about $632 million, or about ₹5,250 crore.

The transaction is expected to close by the October-December quarter, following regulatory approvals.

The portfolio to be acquired consists of Nicotinell, which has a footprint in over 30 countries spanning Europe, Asia, including Japan, and Latin America, Nicabate in Australia, Thrive in Canada, and Habitrol in New Zealand and Canada.

Shares of Dr Reddy’s Laboratories rose about 2.2% on Thursday from the previous day’s close to trade at ₹6,201.75 apiece on BSE at 1.40pm.

The acquisition will include all formats, such as lozenge, patch, gum, and pipeline products, in all applicable global markets outside the United States.

Under this agreement, Dr Reddy’s will acquire the share capital of Northstar Switzerland SARL, a Haleon group company, for a total consideration of £500 million, or $631 million, with an upfront cash payment of £458 million, or $579 million, and performance-based contingent payments of up to £42 million or $53 million, payable in 2025 and 2026.

“The portfolio is attractive for Dr Reddy’s for Haleon’s customer loyalty, its global nature, and the access it provides to key customers. We can unlock more value, grow the portfolio further, and increase global consumer access to these international brands. Given these advantages, it is the ideal anchor for building a larger global OTC platform,” Erez Israeli, chief executive officer of Dr. Reddy’s, said.

“We see the acquisition of this global portfolio of consumer healthcare products led by the global brand Nicotinell as a logical extension of our efforts in consumer healthcare OTC in recent years, and of our purpose of ‘Good Health Can’t Wait’.” Israeli added, “We have been steadily building our OTC presence in various markets and investing in our capabilities. As a business, consumer healthcare is a growing and sustainable business with favorable long-term trends. The business to be acquired from Haleon has maintained steady sales and strong profitability over the years. ”

The proposed acquisition of Nicotinell and its related portfolio will give Dr Reddy a strong footprint in Europe and other global markets, complementing and building on its existing international presence and capabilities.

Despite the decline in revenue from India, driven by more robust sales in the US and European markets, Dr. Reddy’s Laboratories reported a consolidated net profit of ₹1,307 crore in the quarter that ended on 31 March 2024, marking a 36% year-on-year increase from the ₹959.2 crore reported in Q4 FY23.