Wyeth Merger

Wyeth Labs shareholders will get three shares of Cyanamid for every two held. While Wyeth Labs shares are available at Rs 420, Cyanamid India is quoted at Rs 430.

The cost of two shares of Wyeth will amount to Rs 840 which is equivalent to buying three shares of Cyanamid, costing Rs 1,290.

But the difference is that the Cyanamid shareholders are getting an extra share of Cyanamid Agro. Cyanamid is hiving off its agro business to a separate company called Cyanamid Agro. The shareholders of Cyanamid will be allotted one share of Cyanamid Agro for every share held. Wyeth Lederle and Cyanamid Agro, products of the merger, will have core competence in their respective areas. Product lines of the pharma division of Cyanamid and Wyeth were different, hence the merger will result in increased product base.

Wyeth has a strong presence in steroids, female health products and antibiotics while Cyanamid is into anti-filarials, anti cancer and anti-acne products. Wyeth also had a very good export growth in 1995-96.

The equity of Cyanamid Agro will be the same as that of Cyanamid India (Rs 5.25 crore) but its turnover will only reflect that of its agro division. Since agro division is being transferred, shares of Cyanamid Agro is expected to quote at a discount to Cyanamid India. The agro division currently contributes over 50 per cent of the sales of Cyanamid.

This merger would also result in American Home Products, the group parent company, increasing its stake from the current level of 40 per cent to 51 per cent. This was possible mainly due to full ownership in Wyeth India.