Matrix sells 27.8% stake for Rs 607.5 crore

Newbridge, other investors pay Rs 1,500/share in pharma industry's biggest deal

The US-based Newbridge Capital and other strategic investors are picking up 4.05 million shares, or a 27.83 per cent stake, in the city-based Matrix Laboratories for Rs 607.50 crore, at Rs 1,500 per share.

This is the biggest deal in the Indian pharmaceutical industry, both in terms of size and value.

While 2.25 million shares, on a diluted capital base of Rs 14.55 crore, will be issued through a preferential offer, the balance will be sold by the existing shareholders of Matrix Labs. The deal will fetch Rs 337.5 crore to the company and Rs 270 crore to the existing shareholders.

As per the Securities and Exchange Board of India's guidelines, the deal will trigger an open offer to the public shareholders of Matrix Labs since the strategic investors, considered to be acting in concert, are buying more than a 15 per cent stake in it.

While Newbridge proposes to pick up at least a 14.9 per cent stake ( 2.18 million shares) in the company, the other investors, whose names will be finalised soon, will pick up the remaining shares.

Post-deal, the promoters' stake in Matrix Labs will come down to 37 per cent from a little over 50 per cent.

The company has convened an extraordinary general meeting (EGM) on January 28 to seek the shareholders' nod for the preferential offer.

The preferential issue price is 2 per cent higher than the Rs 1,476 closing price of the Matrix scrip on the Bombay Stock Exchange on Friday. The share price went up 2 per cent to Rs 1,505.75 today.

"Newbridge is a long-term investor and sees a huge growth potential in our company. It wants to work with us to transform Matrix into a global pharmaceutical company," N Prasad, chairman and chief executive officer of Matrix, told Business Standard.

"The proceeds of the preferential issue will be used to clear the company's debts, invest in research and development, and to meet long-term working capital needs and other future investments, including acquisitions," said C Ramakrishna, executive vice-president (corporate affairs), Matrix.

The company has a debt liability of about Rs 75 crore. "The preferential issue will strengthen the company's balance sheet," he added.

Matrix Labs recorded a net profit of Rs 62.78 crore on sales of Rs 257.5 crore during the first half of the current financial year. It has projected a turnover of over Rs 550 crore for 2003-04.