Sun Pharma-Ranbaxy merger gets BSE, NSE thumbs-up

NSE and BSE issued letters on July 11, giving approval for Sun and Ranbaxy merger

Sun Pharma, which has been awaiting various regulatory approvals for its $4-billion merger deal with Ranbaxy, has received clearance from the stock exchanges. The National Stock Exchange (NSE) and the BSE issued letters on July 11, giving their approval for the Sun-Ranbaxy merger. Sun Pharma will now have to get clearance from other regulatory bodies such as the Competition Commission of India (CCI) and the Securities and Exchanges Board of India (Sebi), besides courts, shareholders, and creditors.

In its ‘Observation letter for draft Scheme of Arrangement between Ranbaxy and Sun Pharma’, NSE conveyed its ‘no-objection’ with limited reference to listing/de-listing/continuous listing requirements within the provisions of the listing agreement “so as to enable the companies” to file the scheme with the courts.

Notably, NSE has mentioned it reserves the rights to withdraw its no-objection approval at any stage if the information submitted to the exchange is found to be incomplete, incorrect, or misleading. The validity of the observation letter will be six months from July 11, 2014, within which the scheme shall be submitted to the relevant high courts. Following the approvals from the exchanges, Sun will now have to get a nod from the Gujarat High Court, while Ranbaxy will have to approach the Punjab and Haryana High Court.

Upon getting sanction for the scheme by the high courts, the companies would then be asked to submit documents at NSE including a copy of scheme as approved by the courts and result of voting by shareholders for approving the scheme.

When contacted, a Sun Pharma spokesperson refused to comment on the matter.

In April, Sun had announced its acquisition of Ranbaxy from Japan’s Daiichi Sankyo Co Ltd in an all-stock deal worth $3.2 billion, along with a debt of $800 million, taking the overall deal value to $4 billion. The merger will create the world’s fifth-largest generics drugs company by revenue and India’s largest pharma firm by market share.

The deal got its first blow after minority shareholders approached the Andhra Pradesh High Court, challenging the merger and seeking Sebi’s intervention over insider-trading allegations.

Following the petition, the Andhra Pradesh HC ordered status quo on the deal and directed the exchanges and capital markets regulator not to approve the merger. The Supreme Court refused to stay the Andhra Pradesh High Court order. The AP High Court vacated the status quo order in May 2014. The petitioners had alleged heavy trading of Ranbaxy shares before the deal was announced on April 6.

On Monday, the stock price of Sun Pharma closed at Rs 745.60 on the BSE, up 0.59 per cent from the previous close. Ranbaxy share closed at Rs 562.80, up 1.75 per cent from the previous close.