Aurobindo Pharma's second buy in a year, acquires Natrol Inc

The Hyderabad-based Aurobindo Pharma seems to be blazing away on an inorganic growth path in a bid to gain product diversification. On November 12, the company announced its second acquisition this year.

It has informed the BSE that its fully-owned subsidiary Aurobindo Pharma USA Inc has emerged as the highest bidder to acquire nutritional supplement maker Natrol Inc and its other affiliate entities.

The bid, worth $132.5 million with an agreement to take over certain liabilities, will now have to be finally approved by the US Bankruptcy Court for the District of Delaware.

In a statement to the BSE, it has said that the deal is a good fit for Aurobindo Pharma as it provides the right platform for creating a fully-integrated OTC platform in the US and other international markets.

Though the deal is expected to bridge a vital business gap for the company, much will depend on the company's ability to effect a turnaround of Natrol.

According to analysts, Natrol revenue is around $90 million to $100 million and feel that if the company can take over the liabilities and manage it well, the asset could be EBITDA positive.
 
Earlier in January, the company had acquired the operations of loss-making Ireland-based Actavis Plc in seven western European countries: Italy, Spain, France, Portugal, Germany, Belgium and the Netherlands for 30 million Euro. The deal was completed in April.

Analysts say this is a new trend from Aurobindo Pharma, which does not have a history of acquiring weak assets and turning them around. It also does not even have a track record of major acquisitions and therefore the company's ability to turnaround the loss-making companies will be keenly watched.