Biocon Moves to Fully Absorb Biocon Biologics in $5.5 Billion Merger

Biocon said over the weekend that it will acquire the remaining stake in Biocon Biologics through a share swap and partial cash payout in a restructuring deal valuing its biologics arm at $5.5 billion.

Biocon Advances Full Integration of Biologics Unit

Biocon announced that it will make Biocon Biologics a fully owned subsidiary by acquiring all outstanding shares held by partners including Viatris, Serum Institute Life Sciences and private equity investors. The company said the move will streamline operations across its biosimilars business and improve long-term strategic control.

In its exchange filing, Biocon said it currently holds a seventy-eight percent stake in Biocon Biologics. The remaining shares will be acquired through a swap ratio of 70.28 Biocon shares for every 100 Biocon Biologics shares. At a price of about Rs 405 per Biocon share, the transaction values the biologics entity at $5.5 billion.

“This merger strengthens our ability to scale globally while simplifying our structure,” Biocon Chairperson Kiran Mazumdar-Shaw said in a statement. “A unified platform will help accelerate growth in key markets.”

Analysts said the consolidation is expected, given Biocon’s focus on expanding its biosimilars footprint. “This step aligns with the company’s multi-year plan to compete with larger global players,” said Rohan Agarwal, a healthcare analyst at Mumbai-based brokerage Elara Capital.

Share Swap Triggers Dilution, Cash Payout for Viatris Stake

Most minority shareholders in Biocon Biologics will exit through the share-swap mechanism. The company said the exchange will expand its equity base, resulting in dilution for existing Biocon shareholders. The board said the swap ratio was determined at a fixed price to ensure uniform consideration for all participants.

A separate arrangement is required for the portion owned by Viatris, formerly Mylan. The transaction involves a part-cash payout of about $400 million, or roughly Rs 3,600 crore, to settle part of Viatris’ holding. The remainder will be exchanged for Biocon shares.

“The cash component reflects pre-existing contractual obligations,” a Biocon executive familiar with the matter said in background. “The combination of equity and cash ensures a balanced exit for Viatris.”

Market watchers said the cash requirement adds financial pressure. “The payment to Viatris increases near-term funding needs, but the long-term strategic benefit remains intact,” said Nisha Patel, a Bengaluru-based independent pharmaceutical analyst.

Fundraise Planned Through QIP as Stock Volatility Continues

To support the merger and meet liquidity needs, Biocon’s board approved a plan to raise up to Rs 4,500 crore through a Qualified Institutional Placement. The company said the fundraising will contribute to financing the Viatris payout and bolster the balance sheet after the merger.

The proposed QIP will lead to further equity dilution. Biocon Biologics said the move is necessary to complete the restructuring and maintain operational flexibility during the integration period.

Biocon shares fell two percent over the past five days, though the stock has gained six percent so far this year. Investors reacted cautiously to the dilution concerns but remained focused on long-term growth prospects in the biosimilars market.

Biocon said the merger strengthens its ability to compete in emerging and regulated markets where demand for affordable biologics continues to grow. The company emphasized that a single corporate structure will help streamline decision-making as it expands manufacturing capacity and pursues new product launches.

“Consolidation under one listed entity allows us to execute our strategy with greater speed and clarity,” Mazumdar-Shaw said.

The company expects the transaction to close after regulatory approvals and fulfillment of shareholder requirements. 

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