The Andhra Pradesh High Court on Saturday vacated a status quo order it had issued earlier on Sun Pharma-Ranbaxy merger process, paving the way for the pharma giants becoming a single entity.
While vacating the status quo, Justice G Chandraiah also disposed of the petition filed by two investors requesting the high court to restrain the BSE and NSE from giving any clearance to the scheme of amalgamation or merger between Sun Pharma and Ranbaxy.
The petitioners also sought the court to order SEBI to investigate into allegations of the insider trading.
The judge felt there was no need to continue the status quo as the counsel for the market regulator has intimated to the court that a probe is currently underway with regard to the allegations, as prayed by the petitioners.
The court had yesterday heard the arguments from the counsels of the petitioners, Ranbaxy, Sun Pharma and SEBI.
The petitioners alleged that there was heavy trading of Ranbaxy stock before announcement of merger with Sun Pharma on April 6, and requested the court to direct the SEBI to investigate the insider trading of Ranbaxy shares and take appropriate action against Sun Pharma and Silver Street Developers.
The court had earlier issued interim orders to maintain the status quo with regard to the merger.
The counsel for SEBI had informed the court that the investigation will go on as per the procedure and there cannot be any timeframe fixed.
The Mumbai-based Sun Pharma had on April 6 announced that it would fully acquire Ranbaxy in an all-stock transaction with a total equity value of $3.2 billion, along with debt of $800 million, taking the overall deal value to $4 billion.
"Our main grievance is that SEBI has not taken any action (on insider trading). Since SEBI has come before the court and said it will take action, the stay is vacated (by the court)," K Vivek Reddy, counsel for the petitioners, told reporters.
Senior counsel D Prakash Reddy, who is representing Ranbaxy, argued that insider trading allegations and merger process are two different issues and hence be dealt with separately.
The pharma giants had approached the apex court seeking its direction to the high court to vacate the interim order staying merger and ordering a status quo on April 25.
A Supreme Court bench of Justices BS Chauhan and AK Sikri had on May 21 asked the Andhra Pradesh High Court to decide the issue within two days, after hearing appeals filed by Sun Pharmaceutical, Ranbaxy Laboratories and Daiichi Sankyo Company challenging the high court's interim order.