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Nandita Vijay, Bengaluru April 26 , 2021
J Sagar Associates (JSA), the corporate law major, foresees quite a few mergers and acquisitions (M&A) deals in the healthcare. The sector is expected to witness consolidations or divesting stakes which will lead to M&As.

We believe that in the current global scenario, the focus on healthcare services across segments is at its peak. Accordingly, we foresee many such M&A deals in the near future in the healthcare space, said Sidharrth Shankar, Partner, J Sagar Associates.

There is potential for significant growth in the medical devices segment along with the need for point-of-care doorstep diagnostics. The ongoing pandemic has changed how the healthcare industry operates in India. With the increase in FDI inflows in the healthcare sector, we anticipate that companies engaged in the development of digital tools for the healthcare will see traction in terms of investment, Shankar told Pharmabiz.

Recently JSA advised Comvest Partners in its investment in Leixir Dental Group. The company is a technology-enabled provider of outsourced dental solutions serving both independent dentists and dental service organizations (DSOs). It also operates a network of full-service dental laboratories. This covers five dental laboratories across the US in addition to a digital design and manufacturing facility in Gurugram, India.

The transaction was structured as a two-step acquisition, as the Indian entity, Leixir Resources held the overseas business in the US through an intermediate holding company in Singapore. As part of the first leg, Comvest Partners acquired the US business.

“We advised and assisted Comvest on the structuring aspects of the transaction. The deal value is confidential. Given that the target entity, Leixir Resources has overseas subsidiaries, the transaction was structured in a manner which was compliant with the foreign exchange control regime,” he added.

In addition JSA also conducted a legal due diligence on the target entity, Leixir Resources and its wholly owned subsidiary, EasyDent. Further, the company was involved in the drafting, finalization and negotiation of the Share Purchase Agreement.

As the dental lab business which includes the complete range of dental products, including crowns and bridges, implants, surgical guides, and dentures, among other dental products, is housed in the US, it was an important part of the transaction. The digital design and manufacturing facility in Gurugram will continue to operate and provide the support services to the overseas group entities.

The second leg of the transaction involved the acquisition of 100% of the share capital of Leixir Resources. The transaction involved various legs across the three jurisdictions including: share purchase at the US level, capital reduction at the Singapore level and share purchase at the India level.

Further, post-closing, there will be buy-back and redemption at the India level to upstream a part of the consideration to the sell-side. The core of the business operations of Leixir group is based outside India. Accordingly, the transaction was structured in a tax efficient manner to optimize the value for the shareholders of the Indian entity. The execution and closing was seamlessly completed across locations simultaneously despite various stakeholders operating in different time zones, said Shankar.

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