Independent Valuer Appointed In Ciba-Sandoz Merger Case

The Mumbai high court has appointed an independent valuer, Arun Gandhi of N M Raiji & Co, to look into the valuation and share swap ratio in the Ciba- Sandoz merger. The valuation report is to be submitted before the high court by August 14 and the case will now be heard on August 21.

The court noted that in the light of the modified resolution passed by Sandozs shareholders at the extraordinary general meeting (EGM) on December 6, 1996, it would appoint the independant valuer to look into the issue of the fairness of the share swap ratio.

Rejecting the Sandoz plea that the merger ratio was not intended to be revalued, the high court affirmed its minority shareholders stand that there was a need to appoint an independent valuer in view of the modified resolution passed at the EGM.

 

The deadlock between Sandoz and its minority shareholders was broken after Ciba counsel Rafique Dada said that the new merger ratio, if any, to be decided by the court would be acceptable to Hindustan Ciba Geigy.

The boards of Sandoz and Ciba had approved a merger ratio of 1.7:1, upon which Sandoz shareholders had objected that it was unfair to their interests.

Ciba shareholders had, on the other hand, overwhelmingly approved the merger ratio.

Consequently, the merger resolution was passed by Sandoz shareholders, albeit with the modification that the issue of the fairness of the share swap ratio would be referred to the high court.

Shareholders had requested the high court to appoint one or more independant valuers to determine a fair exchange ratio.

Kiran Mehta, president of the Sandoz Minority Shareholders Association, said that minority shareholders were not against the merger but wanted a scientific evaluation of the merger ratio.

Yesterdays court order marks the penultimate stage in the merger process as the court determined that the swap ratio is binding on all three parties to the issue: Hindustan Ciba Geigy, Sandoz (India) and the Sandoz Minority Shareholders Association.

Both Hindustan Ciba and Sandoz have already obtained their shareholders approval for the merger.