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Special payout from Strides

Mumbai, Dec. 10: Strides Arcolab today said it would pay a special dividend of Rs 500 per share following the completion of its $1.75-billion sale of Agila Specialties division to Mylan Inc.

The company, which had originally proposed a distribution of $700 million-$800 million (pre-tax) to shareholders, today said the special dividend of Rs 500 per share would result in a pre-tax distribution of around $525 million.

In a statement, the Bangalore-based company said the additional amount of $250 million was held back because of the warning letter received by Agila from the US Food and Drug Administration (USFDA) for one of its injectable manufacturing sites in Bangalore. It will be paid in whole or part to Strides by Mylan upon satisfaction of certain regulatory conditions related to its injectable facilities in India.

“The company had engaged with the USFDA prior to the closure of the transaction and expects satisfactory resolution of the regulatory conditions and those contingent conditions will be satisfied sometime in 2014,” the company added.

It disclosed that in collaboration with Mylan, third party consultants are being brought to oversee remediation actions and that funding for these costs has also been set aside.

Strides Arcolab had earlier said there had also been certain revisions in the transaction that was announced in February this year.

“The aggregate base consideration payable at closing of the transaction was $1,600 million subject to customary closing adjustments. In addition, a sum of $250 million was payable at or following the closing of the transaction based on satisfaction of certain conditions.”

There was a modest response in the stock markets to the special dividend with the Strides Arcolab stock rising 1.48 per cent to end at Rs 876.95 on the BSE today.

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