Sun Pharma to make mandatory open offer to buy 28.1% of Zenotech

Sun Pharma will make a mandatory open offer to buy 28.1 per cent of biotech company Zenotech Laboratories Ltd for Rs18.41 crore, as part of its $4-billion proposed acquisition of Ranbaxy Laboratories.

With Sun Pharma proposing to buy Ranbaxy, it is mandatory under SEBI rules to make an open offer for Zenotech due to change of ownership.

Sun Pharma plans to acquire more than 96 lakh shares of Zenotech at Rs19 per share for a total of Rs18.42 crore, according to regulatory filing by Zenotech.

Zenotech shares closed yesterday at Rs22.20 on the Bombay Stock Exchange.

Post purchase, Sun Pharma would hold around 74.9 per cent of Zenotech, just short of the mandatory 75 per cent required for Zenotech to remain as a listed company.

Japan's Daiichi Sankyo, which owns Ranbaxy, holds 20.3 per cent of Hyderabad-based Zenotech, Ranbaxy holds 46.79 per cent, Zenotech's previous promoters own 24.8 per cent, and the rest 8.38 per cent is free float.

Daiichi Sankyo may tender all its shares to the offer for a total of around Rs13 crore, but will book a huge loss since it had acquired the shares when it bought Ranbaxy in 2008 for around Rs78 crore.

But the previous promoters of Zenotech led by the Chigurupati family may not sell their stake at Rs19 per share, especially since they had refused to sell their stake to Daiichi Sankyo under an open offer made in 2009 for Rs113.62 a share. (See: Ranbaxy affiliate Zenotech objects to open offer pricing)

Zenotech is a specialty generic injectables company with strong expertise in the area of biotechnology.

The company's predominantly high-value injectables product portfolios serve niche therapy areas like oncology, anaesthesiology, gynecology, and neurology.