SC reprieve for Daiichi Sankyo

Drug maker allowed to proceed with Zenotech open offer.

The Supreme Court today allowed Japanese drug major Daiichi Sankyo to go ahead with its open offer to acquire 20 per cent more in Hyderabad-based Zenotech Laboratories, quashing a Securities Appellate Tribunal (SAT) order which had asked the company to raise the offer.

The Tokyo-based drug firm's Indian subsidiary, Ranbaxy Laboratories, owns a 46.85 per cent stake in the biotechnology firm.

SAT had wanted Daiichi to revise upwards the open offer price of Rs 113.62 a share. Daiichi had challenged the order before the apex court last year.

Daiichi’s counsel Sentil Jagadesen said he could not comment on the details of the judgment as the court was yet to release the order.

The need for an open offer was triggered after Daiichi acquired majority stake in Ranbaxy two years ago. While the drug maker came out with its open offer in January 2009, minority shareholders of Zenotech, including Managing Director Jayaram Chigurupati, demanded an open offer price of Rs 160, saying that was the price agreed upon by Ranbaxy earlier.

The Chigurupatis, promoters of Zenotech, still hold 25.62 per cent in the company. Jayaram Chigurupati today said he would accept the apex court decision on behalf of the minority stakeholders.

“I want this (litigation) to come to a close. It is important to see that the company’s performance is not affected. I have no plans to approach the Supreme Court with a review petition,” Chigurupati told Business Standard, adding that he is yet to decide whether to offload his shares (in the open offer) or not.

Chigurupati said he continues to be the company’s managing director. “I was appointed as managing director for five years and I am in the middle of my term. I can only say that Zenotech is a great asset for Ranbaxy and Daiichi, with the kind of products in the market and the ones undergoing clinical trials,” he said.

Ranbaxy Chairman and Managing Director Atul Sobti had earlier said that Zenotech, with its capability to develop low-cost biotech medicines, was central to Ranbaxy’s growth plans in the bio-similar segment. Bio-similars are low-cost versions of patented biotech products.

Zenotech shares plunged 12.16 per cent after the verdict, to close at Rs 99.7 on the Bombay Stock Exchange. Ranbaxy, however, gained 1.62 per cent to close at Rs 461.70.