Why Aurobindo Pharma-Sandoz deal fell apart? Check brokers' reactions

Hyderabad-based Aurobindo Pharma's decision to break its deal with Sandoz will likely impact the company and its stocks according to analysts who track the sector. The biggest reason why this decision has been taken is due to the company not getting approval from US Federal Trade Commission (FTC).

Sandeep Grover's detailed report on this:

अरविंदो फार्मा ने सैंडोज से क्यों तोड़ी डील?
कितनी अहम थी ये डील और आगे कैसा होगा असर?
साथ ही जानें अरविंदो फार्मा पर क्या है ब्रोकर्स की राय?#AurobindoPharma #Sandoz @AnilSinghvi_ @sandeepgrover09 pic.twitter.com/4C0hFjlOJA

— Zee Business (@ZeeBusiness) April 3, 2020

The Indian pharmaceutical major was expecting the deal to happen by March 2020, the company had indicated in its guidance. The deal was called-off as a result of delay in getting approval.

Sandoz is a US-based company which deals in biosimilars, generics and dermatology among other things. company's dermatology operations with with three units, were part of the deal. The deal was slated to be worth Rs 7600 cr and was announced in September 2018.

Both companies, called-off the deal after mutual consent after the deal could not come through within the expected timeline.

According to experts, Aurobindo Pharma's business in the US may likely take a hit. Meanwhile, some experts also feel that the new developments augur well for the company. They reason being that the company would have had to take on debt in the event of the deal happening.

The confidence of brokers has taken a hit though, Grover revealed. He said credit rating agency Credit Suisse has downgraded the ratings from 'Neutral' to 'Underperform'. The agency also revised the target from Rs 450 to Rs 345.

JP Morgan has also changed the ratings from Overweight to Neutral. It has reduced the target price from Rs 730 to Rs 450 now

Experts felt that the deal could have been beneficial to Aurobindo Pharma.

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Around 13:30 pm shares of Aurobindindo Pharma were trading around Rs 394.50 which were up by 0.60% from the previous close on Thursday.