Ranbaxy may swing deal to take over Orchid Chem
Ranbaxy Laboratories is likely to reach a negotiated takeover deal with Orchid Chemicals & Pharmaceuticals, a Chennai-based drug maker whose promoters are battling to retain control of the company.
According to people in the know, Ranbaxy Managing Director Malvinder Mohan Singh spoke to Orchid’s founder Raghavendra Rao about a negotiated settlement on issues of ownership and management control of his Rs 1,200-crore company.
Ranbaxy has been trying to take over Orchid by acquiring its shares from the open market through a group company-- Solrex Pharmaceuticals.
Solrex is believed to have already acquired a 14.75 per cent stake in Orchid through several block deals, including a couple on Wednesday, an official familiar with development said on condition of anonymity.
Orchid shares have gained 185 per cent since March 24, just around the time Solrex began buying.
On Wednesday, it rose 10.7 per cent to close at Rs 319.05.
A total of 1.2 million Orchid Chemicals shares forming 1.9 per cent of its equity changed hands on the Bombay Stock Exchange in several deals through the day. Two of these were block deals totalling 406,501 shares, or 0.6 per cent of equity.
There has been speculation that Solrex could come with an open offer anytime soon.
Details of Singh’s discussion with Rao of Orchid were not immediately available, but the official said Rao could settle for keeping management control and Singh may agree to an exit price for Rao at a future date.
Orchid’s Rao could not be reached for comment. At Ranbaxy, Singh declined to respond to questions on the issue.
Rao, who had earlier vowed to fend off any hostile bid to take over his company, has softened his stance after failing to secure enough support from financial institutions that have invested in Orchid.
On Tuesday, Rao held a series of meetings with senior officials at Life Insurance Corporation of India and GIC India, seeking their help.
An official who tracked those meetings said the insurance companies “did not give any assurance.”
(With inputs from Vyas Mohan/Mumbai)