Pharma major Zydus Cadila's voluntary open offer to pick up an additional 44.60 per cent stake in German Remedies has received a lukewarm response with the company increasing its stake from 55.40 per cent to over 75 per cent.
The main reason for the poor response, according to sources close to the company, is the marginal difference in the offer price and the prevailing share price. The offer price was Rs 300 a share as against the prevailing price of Rs 290.
When the Cadila group announced its intention to make the open offer in April, the German Remedies stock was hovering at Rs 287 on the Bombay Stock Exchange (BSE). In the past few weeks, the price has remained steady.
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The group was planning to cough up around Rs 110.38 crore for the 44.60 per cent stake thus taking the total stake to 100 per cent.
The marginal gain through tendering shares through the offer has prompted several retail and institutional investors to take a relook at the open offer. Several investors feel that they could get a higher price if they hold on to the stock for some time. The offer was closed last week.
The company's official spokesperson said the company was yet to get details from its issue manager DSP Merrill Lynch. The response from investors was good, but we will take another couple of days to know the exact size of shares tendered by investors, he added.
The immediate fallout of the lukewarm response is that German Remedies will not be delisted as Zydus Cadila's stake via the offer is yet to touch the 90 per cent mark. The offer was in line with the group's plan to have only one single listed entity in the group.
It may be mentioned that Zydus Cadila had acquired a controlling stake in German Remedies early last year when it bought the foreign promoters' holding of 36.96 per cent in German Remedies.
Following the acquisition of stake from Asta Medica, Heller Vermogensverwaltungs GmbH, Boehringer Ingelheim and Schering AG in German Remedies, Zydus made an open offer at Rs 650 a share, a premium of 116 per cent from the current offer price of Rs 300 per share.