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THE Supreme Court has permitted Japanese pharma major Daiichi Sankyo to go ahead with its open offer to buy an additional 20% stake in Hyderabad-based Zenotech Laboratories.

A bench headed by Chief Justice K G Balakrishnan put on hold the Madras High Court order which had restrained the Japanese drugmaker to go for the acquisition at a price of Rs 113.62 per share.

The court passed the order on the plea of Daiichi Sankyo. The appellant company said that all the complaints against it by the Zenotech minority shareholders were aimed at thwarting the whole process so as to extort a share price higher than the one prescribed by market regulator Sebi.

Senior counsel Mukul Rohatgi on behalf of the Japanese drugmaker said the proposed open offer was in accordance with law. He picked holes in the High Court order.

Zenotech’s minority shareholders, on the other hand, 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 the Sebi laws, Daiichi Sankyo was bound to pay the same price (Rs 160 per share) for Zenotech shares as the Japanese company is making the open offer within six months of Ranbaxy hiking its stake in Zenotech, they had said.

As per Sebi’s takeover rule, 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. 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.

Zenotech minority shareholders were demanding Rs 160 per share, which they say the Ranbaxy management had also earlier agreed upon. Daiichi Sankyo, however, denied such price.

The issue was brought before the Madurai bench of the High Court by the minority shareholders of the Hyderabad-based company after their plea was not entertained by Sebi.

The court in its interim order had restrained the Japanese company to go ahead with the offer observing that the Sebi officials did not give due hearing to the complainant.

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