The Rs 327.9 crore pharma major Wockhardt has quietly struck a deal with the Tatas to buy out their 47 per cent stake in the Rs 122 crore Merind Ltd. Wockhardt will pay between Rs 250 and Rs 300 per share for the stake, with the total outgo being Rs 42.3 crore.
The deal ends months of speculation over the fate of the Tata groups pharma company after it was put up for sale early last year. The Merind scrip closed at Rs 131.50 on the Bombay Stock Exchange yesterday, while Wockhardt ended at Rs 182.20. The brass of both Merind and Wockhardt were not available for comment.
The transaction was sealed by J M Financial & Investment Consultancy Services Ltd. Industry sources said the cordial personal equation between Merind chairman A H Tobaccowala and Wockhardt managing director H F Khoraki-wala helped clinch the deal.
According to investment banking sources, J M Financial & Investment was appointed to conduct a fresh valuation of Merind to justify the price range of Rs 250-300 per share. The Tatas were dissatisfied by the earlier valuation conducted by KPMG Peat Marwick, which pegged the value of a Merind share at Rs 160-170.
Several bidders like the Rs 699 crore Glaxo, Wockhardt and a Swedish company had bid for Merind when it was first put up for sale. However, the Tatas turned down the bids, ranging between Rs 150 and 170, as they fell well short of the groups target price of Rs 250-300. Wockhardt next proposed a merger with Merind late last year, which the Tatas rejected.
Thereafter, the Tatas decided to go slow on the sale, in the hope that time and an improved performance would fetch them a good price. There was even talk of transferring Rallis pharma division to Merind, but it led nowhere.
Industry sources said the personal friendship between Khorakiwala and Tobaccowala could have contributed to Wockhardts decision to pay a higher price. Wockhardt is understood to have also bought a sizeable chunk of Merind shares at the current market price. Sources claim that Merind has already received these shares for transfer.
After acquiring full control of Tata Pharma Ltd by buying out Lakmes 36 per cent stake in the company, Merind is reorganising its business plan. The company is planning to hive off Tata Pharma into an export division. Merind is also modernising its manufacturing unit of Vitamin B12, in which it enjoys a monopoly. The dexamethasone unit at Bhandup, in Maharashtra, is also being upgraded.