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Fair trade regulator CCI on Tuesday cleared Torrent Pharmaceuticals Ltd's proposed acquisition of a stake in JB Chemicals and Pharmaceuticals, subject to voluntary modifications offered by the companies.

The development came after Torrent Pharmaceuticals in June this year announced the acquisition of a majority stake in JB Chemicals and Pharmaceuticals in a Rs 19,500-crore deal.

'The proposed combination relates to the acquisition of shareholding by Torrent Pharmaceuticals Ltd (acquirer) in JB Chemicals & Pharmaceuticals Ltd (target) and the subsequent amalgamation of the target with the acquirer,' the regulator said in a release.

After the completion of the deal, Torrent Pharmaceuticals will become India's second most valued pharma company.

"The Commission approved the proposed combination subject to compliance with voluntary modifications offered by the parties (Torrent Pharmaceuticals Ltd and JB Chemicals & Pharmaceuticals Ltd)," it added.

Torrent Pharmaceuticals is the flagship company of the Torrent group and is engaged in the business of manufacturing and selling pharmaceutical formulations (FDFs) across therapeutic segments.

JB Chemicals and Pharmaceuticals is involved in the business of manufacturing and marketing a diverse range of FDFs and active pharmaceutical ingredients (APIs), and also provides contract development and manufacturing organisation (CDMO) services.

"Commission approves acquisition of JB Chemicals & Pharmaceuticals Ltd by Torrent Pharmaceuticals Ltd with voluntary modifications," the competition watchdog said in a post on X.

In June, Torrent said it will acquire a 46.39% stake from promoters Tau Investment Holdings Pte Ltd, an affiliate of global investment firm KKR, for about Rs 11,917 crore. It would additionally buy another 2.80% from certain employees of JB Chemicals for around Rs 719 crore.

Post this, it would make an open offer for buying 26% stake as per Sebi's listing norms, totalling Rs 6,842.8 crore.

This will be the second biggest deal in the pharma sector ever, behind Sun Pharmaceutical Industries' 2015 acquisition of Ranbaxy Laboratories. Post share purchase, JB Pharma will merge into Torrent.

In 2020, KKR bought a 65% stake in JB Chemicals & Pharmaceuticals. In March this year, KKR divested a 5.8% stake in JB Pharma for Rs 1,460 crore through open market transactions.

Torrent Pharma, with annual revenues of more than Rs 11,500 crore, is the flagship company of the Torrent Group, with group revenues of Rs 45,000 crore.

In April 2014, Sun Pharma announced it would acquire troubled rival Ranbaxy in an all-stock transaction worth USD 4 billion that includes USD 800 million in debt. The merger was 'consummated' following receipt of requisite approvals a year later in March 2015.

In another big deal, Mankind Pharma last year completed the transaction to acquire Bharat Serums and Vaccines for a consideration of Rs 13,768 crore.

In a separate release, CCI approved the acquisition of certain shareholding of Edelweiss Asset Management Ltd and Edelweiss Trusteeship Company Ltd by Setu AIF Trust, Konark Trust and MMPL Trust.

"The proposed combination comprises certain interconnected steps resulting in the acquisition of up to 15 per cent shareholding of Edelweiss Asset Management Ltd (EAML) and Edelweiss Trusteeship Company Ltd (ETCL) by Setu AIF Trust, Konark Trust and MMPL Trust," the watchdog said.

Setu AIF Trust is a Sebi-registered alternative investment fund (AIF). It acts through its investment manager, MMPL. EAML acts as the asset management company of Edelweiss Mutual Fund (EMF), and ETCL acts as the trustee for EMF.

The deals beyond a certain threshold require approval from the regulator, which keeps a tab on unfair business practices and promotes fair competition in the marketplace.