Zenotech share holders unmoved by Sun Pharma open offer

The company gives up just 785 shares

Zenotech Laboratories Limited went up almost 5 per cent at Rs 34.85 on the Bombay Stock Exchange soon after Sun Pharmaceutical Industries Limited informed the bourse Friday that it was able to acquire just 785 out of  9.69 million shares, or all the 28.16 per cent of public shareholding, proposed in the open offer.

The open offer price of Rs 20.87 per share was much lower compared with even yesterday’s close of Rs 33.20.

The shareholding of Ranbaxy in the company got transferred to Sun Pharma after the Ranbaxy acquisition following which it had to announce the mandatory open offer to buy shares from public. Daiichi Sankyo holds another 20 per cent shares in the company.

More than the price, the unwillingness of the previous promoter’s family, which alone holds 23.91 per cent, to give up its stake was seen as the reason for the near zero response to this mandatory open offer, according to market analysts.

In May, the new management of Zenotech had stated that the net worth of the company, which has no operations, had completely eroded and, therefore, it would be referred to the BIFR in due course of time. Still, the investors remain undeterred.

“Though the firm is sick, the very fact that Sun Pharma now owns the company must have led the public shareholders to believe that holding onto their shares would benefit them in case the company gets revived under the new management,” said an analyst.  

Ranbaxy had offered an open offer price of Rs 113 per share to complete the acquisition of Zenotech in 2007. Subsequently, previous promoter Jayaram Chigurupati  and other investors moved the Supreme Court stating the offer price was low. Later, some petitioners even challenged the Sun-Ranbaxy merger in the AP high court and got an interim stay for a brief while before the Indian pharma major went ahead with the merger process.