The Madras High Court (HC) on Tuesday stopped Japanese company Daiichi Sankyo from going ahead with its proposed open offer to ac-quire an additional 20% in the Hyderabad-based drugmaker, Zenotech, at Rs 113.62 per share. The issue was scheduled to open on Wednesday and close on August 3, 2009.
Daiichi Sankyo-owned Ranbaxy had hiked its stake to 47% in Zenotech in January 2008. On June 11, 2008, Daiichi Sankyo and Ranbaxy entered into an agreement allowing the Japanese company to buy a controlling stake in Ranbaxy, thereby automatically triggering the takeover code.
As per SEBI takeover norms, if there is a change in control of promoter group of a listed firm, the acquirer has to make a compulsory open offer to acquire at least 20% stake from the company’s shareholders.
Zenotech’s minority shareholders had complained that they were compelled to accept a lower price of Rs 113.62 while Ranbaxy paid Rs 160 in January 2008 to buy its shares. As per Securities and Exchange Board of India (Sebi) laws, Daiichi Sankyo must pay the same price (Rs 160 per share) as Ranbaxy paid for Zenotech shares as the Japanese company is making the open offer within six months of Ranbaxy hiking its stake in Zenotech, they say.
Acting on a petition by one of the minority shareholders of Zenotech Laboratories, the Madurai bench of the Madras HC observed that SEBI officials did not give due hearing to the drug company’s minority shareholders. "In the said circumstances, there shall be an order of interim injunction," the court said.
Zenotech minority shareholders are demanding Rs 160 per share, which they say the Ranbaxy management had also earlier agreed upon. Daiichi Sankyo denies having given any such commitment and on May 24, the company reiterated that there will be no change in the open offer price. A Ranbaxy spokesman declined to comment on the developments.
The Madras HC ruling is the latest in a series of face-offs between Daiichi Sankyo and Zenotech after the Indian company’s minority shareholders led by its managing director and original promoter Jayaram Chigurupati refused to accept the open offer price of Rs 113.62 a share from the Japanese drugmaker.
Talking to ET NOW, Mr Chigurupati alleged that Daiichi Sankyo is being ‘misled’ by its advisors and that he has been trying, without success, to meet the Daiichi Sankyo officials to clarify and resolve the matter.
Last week, Daiichi Sankyo received SEBI’s approval for the open offer despite stiff opposition from the minority shareholders of Zenotech. The minority shareholders of Zenotech Laboratories too moved the Company Law Board alleging mismanagement by Ranbaxy Labora-tories. They are also planning to approach the Securities Appellate Tribunal.
This is the second time the open offer has been stalled. The earlier open offer was to begin on March 13 and close on April 1, 2009. However, the offer ran into controversy as minority shareholders of Zenotech complained to SEBI that Daiichi was not honouring its commitment to make the offer at a previously agreed upon price of Rs 160 per share.
Source: Economic Times