Strides Arcolab tumbled 11.29% to Rs 874.70 at 9:52 IST on BSE after the company said it has completed sale of its Agila Specialties Division to Mylan Inc. for a total consideration of up to $1.75 billion.
The announcement was made before market hours today, 5 December 2013.
Meanwhile, the S&P BSE Sensex was up 380.71 points or 1.84% at 21,089.42.
On BSE, 2.13 lakh shares were traded in the counter as against average daily volume of 25,583 shares in the past one quarter.
The stock hit a high of Rs 1050 and a low of Rs 845.50 so far during the day.
The stock had outperformed the market over the past one month till 4 December 2013, surging 8.56% compared with the Sensex's 2.5% fall. The scrip had, however, underperformed the market in the past one quarter, advancing 10.66% as against Sensex's 11.53% surge.
Strides Arcolab said that since the initial announcement of transaction pertaining to the sale of its Agila Specialties Division, the company's board of directors approved final transaction terms to include a hold back of $250 million contingent upon satisfaction of certain regulatory conditions. Consequent to the warning letter received by the company for one of its units in Bangalore, Strides has agreed to a hold back of $250 million, which will be contingent upon satisfaction of certain regulatory conditions related to the injectable facilities in India. The company expects those contingent conditions will be satisfied sometime in 2014.
Since the initial announcement of this transaction, Strides now expects an additional expenditure of $150 million. This includes cost towards acquisition of additional assets from its erstwhile partners and an estimated remediation cost related to its regulatory commitments post the warning letter.
Strides Arcolab said it will release its final distribution details post the board meeting on 10 December 2013.
It may be recalled that Strides Arcolab had on 28 February 2013 announced the sale of its specialties subsidiary, Agila Specialties and simultaneously its overseas specialties subsidiary, Agila Specialties Asia Pte., Singapore has entered into a definitive agreement for the sale of its subsidiaries to Mylan Inc. The consideration for the transaction was pegged at $1,600 million in cash and potential additional consideration of up to $250 million at that time.
Strides Arcolab's net profit declined 92.6% to Rs 2.22 crore on 10.8% growth in net sales to Rs 199.18 crore in Q2 September 2013 over Q2 September 2012.
Strides Arcolab is a global pharmaceutical company headquartered in Bangalore. The company develops and manufactures a wide range of IP-led niche pharmaceutical products. The company has 5 manufacturing facilities, presence in more than 75 countries in developed and emerging markets.
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