HC to pronounce orders on Sun-Ranbaxy merger tomorrow

Sun, Ranbaxy counsel make a strong plea against stay on merger

Andhra Pradesh High Court vacation judge Justice G Chandraiah has reserved his orders for tomorrow (Saturday) on an interim order issued on April 25 against the proposed merger of Sun Pharmaceuticals Limited with Ranbaxy Industries Limited by another judge.

On Friday, Justice Chandraiah heard the arguments of the petitioners, who got a stay against the Sun-Ranbaxy move on the basis of insider trading allegations, and the counsel of Sun Pharma, Ranbaxy and Daiichi Pharma besides the Securities and Exchange Board of India (Sebi).

The judge took up hearing on the interim orders after the Supreme Court on Wednesday asked the AP high court to clear the matter within two days. Following the completion of the arguments, the judge said he would pronounce his orders on Saturday.

Questioning the petitioners’ contention as well as their locus standi in this matter, Sun Pharma counsel S Adinarayana Rao argued that the issue of the alleged insider trading that took place prior to the announcement of the merger and the process of merger were two distinct things, which were sought to be mixed up by the petitioners in a bid to stop the amalgamation.

“We are not questioning the investigation into the charges of insider trading levelled by the petitioners and this has no bearing on the merger of the two companies. We are opposing the status quo orders, which are coming in way of the process of amalgamation as the investigation is independent of merger issue,” he argued.

Senior counsel D Prakash Reddy, representing Ranbaxy and its parent company Daiichi Sankyo, argued that the interim orders of the AP high court were interfering with the discretion of the High Court of Gujarat and the High Court of Punjab and Haryana, which have to ultimately decide on the scheme of amalgamation as Sun and Ranbaxy were registered in those states respectively.

During the hearing process, the Sebi counsel informed the court that the market regulator had already taken up the investigation into the allegations of insider trading.

On the other hand, the petitioners’ counsel argued they opposed the issuance of in-principle approval to the merger by Sebi. Sun Pharma being one of the parties of the proposed merger itself was involved in insider trading through its 100 per cent subsidiary Silver Street Developers LLP.

The counsel said it was immaterial if the Sun Pharma ended up being the ultimate gainer of the purchase of shares of Ranbaxy by Silver Street Developers as was argued by the company.

“The fact that Silver Street purchased a huge quantum of shares of Ranbaxy prior to the announcement of Sun-Ranbaxy merger on April 6 leading to a 25 per cent appreciation of the share price amounts to insider trading. Therefore, Sebi should investigate the matter and inform the findings to the Bombay Stock Exchange and the National Stock Exchange before they give a go-ahead to the merger process,” Vedula Venkata Ramana, one of the petitioners’ counsel, said.

Earlier, Justice P Naveen Rao had granted status quo orders on the request of the petitioners, who sought besides a stay on the proposed merger, direction to investigate into the insider trading allegations and direction to NSE and BSE not to give in-principle approval for the merger plans.