A combined 276.63 million shares representing 11.5% of total equity of Sun Pharma changed hands on the counter on the NSE and BSE.
According to reports, Daiichi Sankyo planned to sell its entire 8.9% stake (214.96 million equity shares) in Sun Pharmaceuticals in block deals in the stock market on Tuesday. CLICK HERE TO READ THE FULL REPORT
Reports suggest that the shares were to be be sold at a discount of 0% to 10.9%, which would be a price range of Rs 930 to Rs 1,043.80 per share. Goldman Sachs was the sole book runner for the deal.
In June 2008, Daiichi-Sankyo had acquired 63.92% stake in Ranbaxy from in a deal worth $ 4.6 billion (Rs 737 per share). In April 2014, Sun Pharma had acquired Ranbaxy in a shares swap deal. As per the terms of agreement, shareholders in Ranbaxy, including Daiichi Sankyo, had received 0.8 Sun Pharma share for each share of Ranbaxy.
But what explains the fall in the stock and is it a good opportunity to buy the counter?
Explains Sarabjit Kour Nangra, vice-president for pharma research at Angel Broking: “The stock has reacted negatively since the shares would have been sold at significantly lower price, as compared to the previous closing price of the stock. This transaction does not change anything materially for the company. The fall does present a good opportunity for investors to buy the stock.”
Surajit Pal, senior research analyst – institutional equities at Prabhudas Lilladher also suggests that the transaction merely changes the shareholding pattern for the company. Sun Pharma, according to him, still remains on a strong footing.
“Till now, the company has been guiding fine. Going ahead, we need to see how fast they can turn around Ranbaxy and that should be the near – term challenge for Sun Pharma. Its performance in the US markets is also fine. Sun has given a guidance of $250 million to $300 million in synergy in the next three years from Ranbaxy, of which one-third I believe will come in due to tax benefits. So in all, the company remains on a strong footing.”
Analysts at ICICI Securities, too, have reiterated a 'buy' recommendation on the stock. "Post offloading, the stock has corrected around 10% and is down nearly around 20% from it’s all time high. This has provided an ideal opport unity to re-enter the stock. We will revisit our target price post Q4 results as we will have financials of the combined entity. We maintain our target price of Rs 1036 i.e. 26x FY17E EPS of Rs 39.8," said Siddhant Khandekar, Mitesh Shah and Nandan Kamat in a note.