Dr Agarwal's Health Care, Eye Hospital shares tumble up to 17%; here's why

Dr Agarwal's Eye Hospital shares fell 17.7 per cent, while Dr Agarwal's Health Care slid 6.83 per cent on the merger announcement

Shares of Dr. Agarwal's Health Care (AHCL) and  Dr. Agarwal's Eye Hospital (AEHL) tumbled in Thursday's intraday session after both the companies' boards approved a merger of the independently listed companies under the Dr. Agarwal’s Group. 

 

Dr. Agarwal's Eye Hospital shares fell as much as 17.7 per cent on the BSE index, while the stock of Dr Agarwal's Health Care slid 6.83 per cent. As of 2:09 PM, the Agarwal's Eye Hospital and Dr Agarwal's Health Care were trading 12.5 per cent and 5.9 per cent, respectively, compared to a 0.65 per cent decline in the benchmark Nifty50 index. 

 

So far this year, Dr Agarwal's Eye Hospital stock has fallen 27 per cent, while the benchmark Nifty50 has risen about 3.5 per cent. Shares of Dr Agarwal's Health Care have risen over 8 per cent so far since its listing earlier this year.  READ STICK MARKET LIV UPDATES TODAY

Dr Agarwal's Health and Dr Agarwal's Eye Hospital to merge

The firms, in an exchange filing, said that their board approved the scheme of amalgamation of these independently listed companies under the Dr. Agarwal’s Group, to "streamline operations and provide unified management focus, driving efficiency and strategic alignment."

 

The scheme is subject to the requisite approvals from respective shareholders of AHCL and AEHL and the applicable regulatory approvals, the statement said. "The merged entity inter alia brings together significant complementarities that exist between both entities and is poised to create meaningful value for various stakeholders, including respective patients, employees, and shareholders of both entities."

 

The company expects that the merger will consolidate the businesses will enable operational and financial efficiencies through streamlined functions and agile decision-making. " Overall, the transaction is expected to enhance shareholder value and be EPS accretive from the first year of implementation."

 

As per the share exchange ratio outlined in the scheme, AHCL will issue and allot 23 new equity shares of face value ₹1 each, fully paid-up, for every 2 equity shares of face value ₹10 each, fully paid-up, held by eligible shareholders in AEHL. 

 

Additionally, the Board of Directors of AEHL has approved a preferential issue of about ₹70 crore, comprising 1,32,827 equity shares at an issue price of ₹5,270 per share, representing 2.7 per cent of AEHL’s equity share capital. The issue is also subject to requisite regulatory approvals.

 

"We firmly believe that the approved swap ratio is fair, balanced, and in the best interests of all stakeholders, laying a strong foundation for the next phase of our growth," Adil Agarwal, the chief executive officer, Agarwal's Health Care, said in the statement.