Tensions between India and China — the South Asian nation’s biggest trading partner — have escalated amid a renewed spat over territory in a remote area of the Himalayas, one of the most serious flareups since a border war in 1962. Now, the Indian government is reportedly to reject Shanghai Fosun Pharmaceutical Group Co.’s proposed $1.3 billion takeover of an Indian drugmaker, thereby scuppering the biggest-ever Chinese acquisition in the country.
The collapse of the acquisition would be a setback for Fosun Pharma, which had sought Gland Pharma’s stable of generic injectable medicines and facilities approved to manufacture products for sale in the U.S. The setback highlights the difficulties faced by China’s once-prolific acquirers, who are facing mounting pressure at home and abroad.
Fosun Pharma, backed by Chinese billionaire Guo Guangchang, agreed in July last year to acquire control of Gland Pharma from an investor group including KKR & Co. The Gland Pharma purchase had already completed Indian antitrust filings and been reviewed by country’s Foreign Investment Promotion Board.
Fosun Pharma said in a July 27 filing to the Hong Kong bourse that it had obtained relevant approvals from Chinese authorities. The acquisition is still subject to the review and
approval of India’s Cabinet Committee on Economic Affairs, so the termination date has been further extended to Sept. 26, the filing shows.“This is almost like a sanction,” said Abhijit Joshi, a mergers and acquisitions lawyer and managing partner at Veritas Legal in Mumbai, who isn’t involved in the deal. “Rejecting a deal like this is almost like sending a signal to say, ‘no Chinese business,’ which means there could be a retaliatory action, trade wise, by China.”
“From Chinese investment into India for M&A, yes there’s going to be an impact,” Veritas’ Joshi said. “They’re going to be increasingly nervous about investing in India. That capital that was available from China is not going to be available, at least in the short term, which means doing a deal is going to be that much more difficult.”
