Tatas sell Merind to Wockhardt

This is the second sell-out by the Tatas within a month. It sold the brands and plants of Lakme to Hindustan Lever for Rs 200 crore. Lakme shares later plummeted by nearly Rs 130 within a fortnight.

Kampani said they have already informed the Securities and Exchange board of India (SEBI) and various stock exchanges about the agreement signed today.

Addressing newsmen, H FKhorakiwala, Chairman of Wockhardt, said though the SEBI regulations require to make an offer to purchase 20 per cent of the remaining shares, the company has decided to acquire 100 per cent stake in Merind. "This will allow Wockhardt to consolidate the entire sales and profits of Merind, thereby ensuring value creation and quick and adequate return on investment to the Wockhardt shareholders," he said.

"However, if the remaining Merind shareholders do not take the Rs 260 per share offer, a revised offer would be made to them. As soon as Wockhardt purchases hit the 90 per cent ceiling, Merind’s shares would be delisted, and they will become shareholders of an unlisted company," Kampani revealed.

The financial institutions hold 15 per cent stake in Merind, while FIIs have a stake 3 per cent. The rest is with the public.

Khorakiwala said the synergies in the takeover of Merind would immediately widen Wockhardt’s major therapeutic coverage from the present 29 per cent to 42 per cent of the totalmarket.

Wockhardt also acquired the entire 100 per cent equity in US $ 18 million Wallis Lab Ltd, Luton UK at a price of $ 5 million, the chairman said.With these two acquisitions, Wockhardt would turn itself into India’s fourth largest pharma company with a consolidated turnover of about Rs 675 crore.

After the acquisition process is over, Wockhardt would endeavour to help Merind achieve its full potential and grow rapidly. Wockhardt intends to use its R&D strengths to synergise with the field coverage of Merind and create big brands, he said.

A H Tobaccowala, Chairman of Merind, said the Tatas got out of pharma business as it wanted Merind to get associated with a bigger company with better R&D facilities. "It was not possible for the Tatas to make massive investments as required in the R&D facilities of Merind," he said.

Tobaccowala said this deal is the best for the Merind shareholders as they are getting an opportunity to sell their shares at a better price as compared to the price prevailing inthe last six months.

Wockhardt also announced today its six month results for the period ended December 31, 1997. Sales went up 25 per cent to 213 crore while profit after tax increased by 15 per cent to Rs 35 crore.

Wockhardt has apparently edged out a host of other suitors (including Glaxo) to takeover Merind, by making what has been termed by Merind chairman, A H Tobaccowala, as a "very generous offer". The offer price of Rs 260 per share represents a premium of over 40 per cent of the current Merind stock price.