India’s competition watchdog has approved the merger of online pharmacy Medlife with larger rival PharmEasy, the first major consolidation play in the sector that has recently seen the entry of deep-pocketed players like Reliance Industries and Amazon.
The deal will see API Holdings, the parent entity of PharmEasy, acquire 100% equity shares of Medlife, filings with the Competition Commission of India (CCI) show. Medlife’s promoters will in return get a 19.95% stake in the combined entity.
ET had first reported on the proposed merger of PharmEasy and Medlife in August, when the two firms had made a joint application to the CCI.
Sources close to the developments had told ET that the valuation of the combined entity would be around $1.2 billion, which would value the stake held by Medlife’s shareholders in API Holdings at around $240 million.
The approval comes a little over a month after Reliance Retail acquired 60% stake in Chennai-based Vitalic, parent company of Netmeds, for approximately Rs 620 crore. Reliance also got 100% ownership of Netmeds’ subsidiaries, Tresara Health, Netmeds Market Place and Dadha Pharma Distribution.
Earlier in August, e-commerce giant Amazon too marked its entry into the e-pharmacy segment, starting deliveries of prescription drugs to customers in Bangalore. The company is working with its largest seller Cloudtail to sell medicines, which will require customers to upload a photo of their prescription in order to get them delivered home.
PharmEasy was valued at around $700 million when it closed a $220 million funding round led by Singapore’s Temasek in November last year. It is as yet unclear if the transaction between Medlife and PharmEasy a purely stock-swap deal.
PharmEasy and Medlife did not respond to ET’s queries till press time on Tuesday.
Ananth Narayanan, who was appointed Medlife CEO in August last year, will stay on as an advisor for some time even after the deal is closed, sources had told ET. Narayanan had also invested in Medlife in his personal capacity and had assumed the position of cofounder as well.
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