Eugia US Manufacturing LLC, USA, a wholly-owned step-down subsidiary of Aurobindo Pharma Ltd. has signed an asset purchase agreement with Empower Clinic Services New Jersey, LLC to dispose of its business assets as a going concern for $52 million, Aurobindo Pharma said in an exchange filing on Monday.
The deal will also involve Eugia's related assets, liabilities and employees since capacities and operations are being ramped up in other units of the company. Once the deal is closed, it will enter into contract manufacturing arrangements with the buyer.
A cash consideration of $52 million will be received from the disposal of the assets. An additional $58 million will also be made as lease payments to Eugia US Manufacturing LLC and / or its affiliates, over the 20-year lease term, including extensions.
The transaction is expected to close within 90 days from the date of agreement, subject to fulfilment of closing conditions referenced in the definitive agreement, including financial closure by the buyer.
Aurobindo Pharma will also be in focus after the USFDA concluded the inspection at Unit-III of Eugia Pharma and issued nine observations to the facility. As a result, the company has decided to temporarily stop manufacturing on certain lines to conduct a holistic investigation and corresponding partial distribution.
The company further said that it has already started working with the regulator and third-party consultants to accelerate the process of restarting production at the earliest.
As of now, Aurobindo Pharma does not see a material impact on the business due to this move. The inspection at Unit-III, which is a formulations manufacturing facility was conducted between January 22 to February 2, 2024.
Shares of Aurobindo Pharma have been flat so far this year, but have gained nearly 160% over the last 12 months.
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