INDIA BUSINESS WORLD - FEBRAURY 16th - FEBRAURY 29st - 2008
RANBAXY BOARD OKS DEMERGER OF NEW DRUG UNIT INTO SUBSIDIARY
Ranbaxy Laboratories has announced that its board of directors has approved demerger of the company’s New Drug Discovery Research (NDDR) unit into a subsidiary, Ranbaxy Life Science Research Ltd (RLSRL). The demerger is subject to requisite approvals.
The demerger will result in cost savings of about $25 million in the current year for Ranbaxy, a recurring expense likely to increase in the coming years, the pharma company said in a statement. Ranbaxy said the move is a significant step in creating an independent pathway for NDDR with dedicated resources and an enhanced focus for long-term growth.
Under the scheme, Ranbaxy shareholders will be entitled to receive one equity share of Re 1 each of RLSRL, without any payment for every four equity shares of Rs 5 each held in Ranbaxy, as on the record date, to be fixed for the purpose, after receipt of requisite approvals. All assets, liabilities, research personnel and pipeline related to the NDDR Unit will be transferred to RLSRL. The appointed date for the scheme to come into effect after receipt of all the requisite approvals is January 1, 2008.
Ranbaxy has subscribed to redeemable preference shares of RLSRL aggregating Rs 200 crore to meet its business needs. Post demerger, the equity capital of RLSRL will be about Rs 12.6 crore. Ranbaxy and RLSRL Employees Welfare Fund Trust will respectively hold 19.8% and 4.9% of the equity share capital of RLSRL. The balance will be held by Ranbaxy shareholders. It is proposed that RLSRL equity shares will be listed on NSE and BSE while GDRs will be listed on the Luxembourg Stock Exchange. All approvals required for the scheme to come into effect, including that of the Punjab and Haryana High Court, are expected in the second half of 2008.
“The demerger establishes a robust structure for carrying out research at the cutting edge of modern medicine. It will enable RLSRL to create intellectual property at a faster pace while positioning it for the future,” said Ranbaxy CEO and MD Malvinder Mohan Singh.
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