Reliance Retail Buys Majority Stake Of Netmeds For Rs.620 Cr

A significant consolidation with back to back deals is witnessed by the E-Pharmacy segment. A few hours back, Reliance has announced the acquisition of a controlling stake in Netmeds.

Through the wholly-owned subsidiary Reliance Retail Ventures Limited (RRVL), Reliance Industries Limited has acquired a majority equity stake in Vitalic Health Pvt. Ltd. and its subsidiaries (collectively called Netmeds) for about Rs 620 crore in cash, valuing the company at nearly Rs 1,034 crore in the transaction.

According to a press statement by Reliance, the investment represents 60% holding in the equity share capital of Vitalic Health and 100% direct equity ownership of its subsidiaries including Tresara Health Private Limited, Netmeds Marketplace Limited, and Dadha Pharma Distribution Pvt Limited.

In April, when the latter started fulfilling orders through JioMart the synergy between Reliance Retail and Netmeds began.

Earlier this year, Cogs started moving when Vitalic started making changes to its capital structure to facilitate this transaction, regulatory filings showed.

Vitalic converted Series A shareholders’ stake and allotted them equity capital. Bennett Coleman and Company Limited, which held share warrants, was allotted 229,845 equity shares for the same. A special resolution to the company was also passed to cancel the existing employee stock option plan as well.

Vitalic’s promoters — Pradip Dadha and family — who controlled around 30% stake in the company and its largest investors including Sistema Asia Fund, Tanncam Investment, and US-based healthcare fund manager OrbiMed, are likely the biggest beneficiaries of this transaction.

On 31 December 2019, the company had last allotted 7750 Series C CCPS to BlackBuck Technologies LLP, and along with the documentation of share allotments, it had filed a valuation certificate.

According to the certificate, Vitalic Health has valued at Rs 1,123.5 crore with an estimated turnover for FY20 pegged at Rs 604.5 crore at the loss of Rs 154 crore. The audited financial results for FY20 is not filed by Vitalic Health yet. During FY20, alone Vitalic had raised more than Rs 110 crore.

On Tuesday, Medlife had made a formal filing at CCI for its proposed merger with bigger rival PharmEasy. If the deal goes through, the combined entity will sit third after Reliance and Amazon, the two new entrants in the segment.

Recently, Amazon marked its entry into the segment by launching its online pharmacy.

According to the Fintrackr estimate, Medlife valuation might be discounted by over $140 million in the merger deal. As per its valuation report, the company had a total value of $375 million until January 2020. However, in the merger deal, Medlife appears to have been valued at $235 million — over 37% haircut from Medlife’s eight months old valuation report.