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AstraZeneca set to pop delist pill

Mumbai, March 3: Sweden’s AstraZeneca Pharmaceuticals AB has made a delisting offer to shareholders of its Indian subsidiary AstraZeneca Pharma India Ltd.

AstraZeneca Pharma India today announced that its board of directors would meet on March 5 to consider the proposal.

“AstraZeneca Pharma India Ltd has on March 1, received a letter from AstraZeneca Pharmaceuticals AB (AZP AB) Sweden, promoter of the company, proposing to make a voluntary delisting offer to the public shareholders of the company in accordance with the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2009, with a view to delisting the equity shares of the company,” the Indian unit informed the stock exchanges today.

The parent holds 75 per cent of the equity of AstraZeneca Pharma India.

The announcement led to shares of the Indian subsidiary soaring at the stock exchanges today. On the BSE, the AstraZeneca Pharma India share gained 20 per cent, or Rs 185.15, to end at Rs 1,110.90, a new 52-week high.

Incidentally, the delisting offer comes at a time the domestic unit has shown vast improvement in its performance. This is also reflected in the Swiss parent’s decision to cut the financial grant to the Indian arm to $14 million from $22.5 million announced earlier as its financial performance has been in line with the parent firm’s expectations.

Last July, the parent had decided to provide a financial grant between $22.5 million and $26.5 million to the Indian arm over a period of three years to help it establish more presence in the country.

“AstraZeneca Pharmaceuticals AB believes that business and financial performance of the Indian arm has been in line with more recent expectations and that it would require around $3.5 million by the end of the 2014 financial year and no further grant thereafter,” the company said in a filing to the stock exchanges.

The delisting proposal comes amid moves by several foreign companies to raise their stakes in their domestic arms.

Recently, Moody’s announced an open offer to acquire up to 26.5 per cent of the equity of Icra at a price of Rs 2,000 per share in order to acquire a majority stake in the Indian subsidiary.

Last December, GSK also made an open offer to increase its stake in GlaxoSmithkline Pharmaceuticals to 75 per cent for a consideration of over Rs 6,000 crore.

Incidentally, the delisting offer at AstraZeneca also comes after the controversy relating to a similar move last year by Fresenius Kabi (Singapore) Pte with respect to its Indian outfit Fresenius Kabi Oncology Ltd.

The delisting proposal came few months after an offer for sale (OFS) that saw the promoters bringing down their stake to 75 per cent. Some shareholder advisory firms had alleged that the OFS made the delisting process easier since they could buy the shares from the subscribers to the OFS.

Such apprehensions are now being expressed with regard to AstraZeneca’s delisting proposal as well.

 
 
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