Wockhardt Buys Tatas Out Of Merind

Wockhardt, the Rs 400 crore pharma major, yesterday announ-ced the acquisition of a controlling stake in both the Rs 200 crore Tata group pharma company Merind and its 100 per cent subsidiary, Tata Pharma. Wockhardt will buy out the Tatas 50 per cent stake in Merind at a price of Rs 260 a share, at a total outgo of Rs 47 crore.

Announcing this at a press conference yesterday, Wockhardt chairman and managing director H F Khorakiwala said the company would simultaneously make an offer for the remaining 50 per cent held by financial institutions and the public.

To ensure fair play for the minority Merind shareholders, it has been decided to buy out the entire equity holding, Khoraki-wala said. This would also enhance value for Wockhardt shareholders, he said.

The acquisition immediately raises Wockhardts therapeutic coverage from the present 29 per cent of the total market to 42 per cent, the company stated. As a result of the acquisition, the company is set to improve its ORG ranking in terms of retail offtake from the current 19th position to the ninth position. In addition, Wockhardt will also significantly enhance its product mix.

Merind director AH Tobacco-wala, who is also a member of the Wockhardt board, said the final offer price of Rs 260 a share was below the companys expectations. He added that several other companies had also offered to buy out Merind. However, Merind finally settled for a lower price owing to community consciousness and since he himself was associated with both companies.

Tobaccowala said the decision to accept a lower price was also motivated by the desire to accommodate all the shareholders.

Merinds remaining shareholders stand to benefit from the sale since the current offer price is well above Merinds average closing price of Rs 137 in the past six months.

Tobaccowala said Merind was looking forward to its association with a larger company like Wockhardt, which has strong research and development facilities and a strong global presence

He added that Wockhardt had agreed to retain Merinds 1,400-strong workforce after the buyout.

Wockhardt had recently acquired a 100 per cent stake in the $18 million Wallis Laboratories of the UK for $5 million.

Wallis is a reputed manufacturer of generic and over-the-counter pharmaceuticals.

Wockhardts main strengths are in the areas of pain and inflammation drugs, antibiotics and anti-bacterials, cardiology and parental nutrition while Merinds strengths lie in corticosteriods, vitamin B12 and neuro-psychiatry segments.

Wockhardt earlier had no presence in the latter segments. Its enhanced product line now places it ahead of rivals like Novartis, SmithKline Beecham , Pfizer and Nicholas Piramal.

Rs 200cr marked for acquisitions

Wockhardt managing director H F Khorakiwala yesterday said the company had earmarked a sum of Rs 200 crore for more acquisitions. Addressing a press conference after the board meeting where the acquisition of Merind and the unaudited results for the six months ended December 31, 1997, were taken on record, Khorakiwala said Wock-hardt was targeting a turnover of Rs 1,000 crore by the year 2000.

With the acquisition of Merind and Wallis, Wockhardts turnover will more than double to Rs 675 crore, against last years Rs 312 crore. Khorakiwala said sales growth in future would come largely from organic growth, partly aided by domestic and international acquisitions.

The acquisitions of Merind and Wallis are said to be among the first steps in the companys consolidation process, with some more acquisitions lined up for the next fiscal. Khorakiwala said the two acquisitions were together expected to cost nearly Rs 105 crore (assuming Wockhardt picks up 100 per cent of Merinds equity) . The acquisitions have been funded by debt and internal accruals in an equal proportion, he said.

Wockhardt will be reviewing all the fresh investments in Merind proposed by the Tatas in the past few months. The Tatas had planned an investment of around Rs 18 crore in the current year. However, a final decision on Merinds restructuring will be taken later.