By 16 December, 2009

The country’s second largest drug-maker by revenues, Ranbaxy Laboratories, which is now controlled by Daiichi Sankyo, has sold part of its 14% stake in Orchid Chemicals triggering rumours that the Japanese firm may no longer be keen on continuing with the minority stake in Orchid.

Ranbaxy (just before promoters sold off to Daiichi Sankyo in mid-2009) had triggered street expectations of a hostile takeover of Orchid when it slowly hiked stake in the company through a subsidiary when promoters’ holding got diluted due to margin calls. Serum Institute of Poonawalas also entered the fray which some considered a rescue plan to avoid management takeover by Ranbaxy and others saw it as a case of bidding war in the offing.

Thereafter, Ranbaxy and Orchid had jointly announced that the two intend to cooperate through a business alliance involving multiple geographies and therapies for both finished dosage formulations and active pharmaceutical ingredients. Ranbaxy had stated that it did not plan to take over the management of Orchid and had been holding on to its stake all through this time.

On Tuesday, Ranbaxy arm Solrex sold some 5 lakh shares of Orchid at a price of Rs 222/share. It is estimated that its average cost of acquisition was Rs 191 and so, it pocketed returns of 16% in partial sale in less than two years of making the initial purchase(early 2008).

The heavy trade of close to 30 million shares on Wednesday across BSE-NSE triggered street talk that Ranbaxy has exited the investment. The share price crashed over 10% to close at Rs 197.85 at BSE just marginally higher than the cost of purchase by Ranbaxy. Details of bulk deal sale if it involved Ranbaxy arm will be clear by Thursday.

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