Strides Pharma To Take Over Plama

"The board of directors of the companies have met in the last couple of days to formalise the deal," a company official said.

According to the valuation worked out, seven shares of Plama Labs will be swapped for one share of Stride, it is learnt. P M A Razak, who promoted Plama Labs, was finding it difficult to manage the company and had reconciled himself to a takeover or merger.

"Stride Pharma group will acquire a 42 per cent promoters' stake in Plama in stages through swapping of shares of the unlisted Strides Pharma," the official said . "Since the takeover code is already in place, we will offer the same swap ratio or cash equivalent to Plama's minority shareholders through an open public offer at a later stage as stipulated by the Securities and Exchange Board of India."

 

A merchant banker who helped the company put through the deal said, "It makes eminent sense for Stride group to acquire Plama since it happens to be a major exporter of formulations and needs to have a captive bulk drug unit to keep pace with growing exports."

The Stride group, which has four units, is heavily into exports, and has been sourcing its bulk drug needs from other units.

"Initially, we may acquire a little less than 10 per cent stake in Plama Labs from the promoters to have a couple of our directors on the board and also start managing the unit," said a Strides source. The process worked out is 'to avoid incurring Sebi's wrath and to buy time to put the deal through'.

Arunkumar, a promoter-director of Strides, could not be contacted for comment. However, when Business Standard had approached him earlier, he had said, "We are at a preliminary stage since we are weighing all the possible options, and a deal may be in sight in a couple of days' time."

A greenfield project, Plama Laboratories was set up by Razak and his associates in January last year. The Rs 10-crore sophisticated facility has an installed capacity to manufacture 38 tonnes per annum of ciprofloxacin, norfloaxacin, albendazole and omeprazole. The company had tapped the capital market in January 1995 to mop up Rs 3.40 crore through a par issue. The Rs 10 paid-up equity share is now being traded below par at Rs 3.50 on the Bangalore exchange.