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THE Madras High Court has stopped Japanese company Daiichi Sankyo from going ahead with its proposed open offer to acquire additional 20% in Hyderabad-based drugmaker Zenotech at Rs 113.62 per share.  

   Daiichi Sankyo-owned Ranbaxy had hiked its stake to 47% in Zenotech in January 2008.

   Acting on a complaint by one of the minority shareholders of Zenotech Laboratories, the Madurai bench of the Madras HC noted that Sebi officials did not give a proper hearing to the complaints of minority shareholders of the drug firm.

   Zenotech’s minority shareholders had complained that they were compelled to accept a lower price of Rs 113.62 now while Ranbaxy paid Rs 160 in January 2008 to acquire Zenotech. As per Sebi laws, Daiichi Sankyo must pay the same price (Rs 160 per share) at which the company’s shares were sold 26 weeks prior to the date of public announcement, they added. “In the said circumstances, there shall be an order of interim injunction,” the court said.

   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 shareholders of the company.

   Zenotech minority shareholders are demanding Rs 160 per share, which they say the Ranbaxy management had earlier agreed on. 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. 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. Mr Chigurupati alleged that Daiichi Sankyo is being ‘misled’ by its advisors and that he has been unsuccessfully trying to meet the Daiichi Sankyo officials to clarify and resolve the matter.

   A few days back Daiichi Sankyo received Sebi’s nod for the open offer despite stiff opposition from the minority shareholders of Zenotech. The minority shareholders of Zenotech Laboratories also moved the Company Law Board (CLB) alleging mismanagement by Ranbaxy Laboratories. They are also planning to approach the Securities Appellate Tribunal (SAT).

   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

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