Ranbaxy Laboratories, India’s largest drug maker, is set to acquire management control of Orchid Chemicals & Pharmaceuticals over the next few months.
Both companies have entered into a long-term strategic alliance in which Ranbaxy nominees will be appointed on the board of Orchid.
A source close to the deal said Orchid’s promoter and managing director K Raghavendra Rao had agreed to appoint two or three Ranbaxy nominees on the Orchid board.
It was a negotiated deal through which Ranbaxy would increase its holding over some time and not immediately, said the source who spoke on condition of anonymity. The appointment of Ranbaxy directors was the first part, he said.
Ranbaxy on Tuesday officially announced a "strategic" business alliance with Orchid involving collaboration in multiple geographies, therapies for finished dosage formulations and bulk drugs and active pharmaceutical ingredients. Ranbaxy also confirmed that it had acquired 14.7 per cent in Orchid through group company Solrex Pharmaceuticals.
When contacted Ranbaxy managing director Malvinder Mohan Singh said: “We do not believe in hostile bids. We have entered into a long-term strategic alliance with Orchid. The agreement will be mutually beneficial and synergistic, allowing both organisations to leverage each other’s inherent strengths."
Singh refused to comment on whether Ranbaxy would increase its holding beyond 14.7 per cent or appoint nominees on the board of Orchid.