Shanghai Fosun Pharmaceutical (Group) will sign an agreement on Wednesday to acquire a controlling stake in Indian pharmaceutical company Gland Pharma, Economic Times reported, citing inside sources.

Shanghai Fosun Pharmaceutical, owned by Chinese billionaire Guo Guangchang, will be paying $1.4 billion for the entire transaction. The deal marks the first major FDI from a Chinese pharmaceutical company into India's Pharma sector.

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"We will be signing the deal later today at Hong Kong and an official announcement will be made to the Chinese exchanges later," said a source familiar with the matter.  

According to reports, Shanghai Fosun will acquire 96 percent of Gland Pharma, which includes shares held by the company's founder Ravi Penmetsa and his family as well as India's private equity giant, KKR & Co LP. However, Shanghai Fosun and Gland Pharma are yet to release an official statement about the deal.

If the deal is signed, it will be subject to regulatory approvals from Indian authorities. Since the deal involves a Chinese company, Indian regulators are expected scrutinize the deal far more strictly.       

The deal comes in the wake of recent strain in the diplomatic ties between India and China. However, sources claim that Gland Pharma's promoters and KKR officials are confident about getting regulatory approval.       

In June, Indian media reported that Shanghai Fosun Pharmaceutical (Group) has emerged as the frontrunner to acquire Gland Pharma after US giant Baxter and private equity company Advent backed out from the race.

Shanghai Fosun reported a revenue of revenue of $1.9 billion in 2015, while its market valuation stood at roughly $8.3 billion as of 31 December 2015. The company has been aggressive on the acquisition front to fuel its growth, making 17 deals worth $1.6 billion since 2010.

TagsShanghai Fosun Pharmaceutical, Gland Pharma, India and China