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Rediff.com  » Business » Matrix move to give 10% more to Mylan

Matrix move to give 10% more to Mylan

By Rajesh Abraham & C H Unnikrishnan in Mumbai
October 16, 2006 11:00 IST
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To allow its new promoters to pick up an extra 10 per cent stake, Matrix Laboratories is planning a $100 million foreign currency convertible bond issue.

US-based Mylan Laboratories had acquired the majority stake in the Hyderabad based pharmaceutical company recently.

According to sources close to the development, the timing of the FCCB issue is likely to coincide with Mylan's open offer for Matrix. Mylan's open offer for a 20 per cent stake held by the public in the Indian pharmaceutical company begins on October 20 and ends on November 3.

According to the plan, Mylan will offer to buy a significant portion of the FCCBs, which will be priced at a premium to the open offer price of Rs 306 per share.

Company executives, when contacted, neither confirmed nor denied the FCCB move.

Investment banking sources said there was no regulatory hurdle to Matrix coming out with FCCBs, provided it gets due approval from the shareholders.

New York Stock Exchange-listed Mylan, through its holding company registered in Mauritius, had recently entered into an agreement with Matrix Labs' promoter Prasad Nimmagada, Spandana Foundation and private equity fund Newbridge Investments and Maxwell Mauritius Pte to buy a 51.5 per cent stake in the Indian company. Mylan proposed to buy another 20 per cent from the Indian public through the open offer.

Industry analysts said the FCCB move could be aimed at a long-term plan by Mylan to delist Matrix from the Indian stock market.

Rules allow companies to delist shares from stock markets after gaining control of 90 per cent or more stake. Considering that Mylan gets 20 per cent stake from the open offer, its stake in Matrix will touch only 71.5 per cent.

Sources said the US company would be close to the required 90 per cent after the conversion of the FCCBs, making it eligible to delist the shares from Indian markets.

Matrix, an active pharmaceutical ingredients manufacturer, is a major exporter from India, supplying several global pharmaceutical companies.

In August this year, Mylan and Matrix Laboratories had announced that Mylan would acquire up to 71.5 per cent of Matrix shares for Rs 306 per share.

Under the terms of the transaction, Mylan will purchase 51.5 per cent of Matrix's shares pursuant to an agreement with certain selling shareholders and will make an open offer to Matrix's remaining shareholders to acquire up to another 20 per cent of the company's shares at the same Rs 306 per share price in cash.

Assuming the open offer is fully subscribed, the total purchase price is expected to be approximately Rs 3,428 crore ($736 million).
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Rajesh Abraham & C H Unnikrishnan in Mumbai
Source: source
 

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