Mumbai, April 9: Sun Pharma today denied insider trading allegations against its wholly owned arm Silverstreet Developers LLP in the $3.2-billion acquisition of Ranbaxy Laboratories.
Silverstreet Developers, which had no holding in Ranbaxy till September last year, had bought shares of the Gurgaon-based company aggregating 1.41 per cent stake by the end of December. As on March 31 this year, its holding stood at 1.64 per cent.
In a statement, Sun Pharma said the purchase of Ranbaxy shares by Silverstreet “does not violate insider trading rules”.
Sun Pharma also denied reports that Sudhir V. Valia, brother-in-law of the company’s managing director and promoter Dilip Shanghvi, was one of the partners of Silverstreet.
“Sudhir Valia is not and was not a partner of Silverstreet Developers when the purchase of shares of Ranbaxy Laboratories was effected,” it said.
According to Sun Pharma, Silverstreet has two partners and both are its 100 per cent subsidiaries. Therefore, all the benefits flowing from the investment in Ranbaxy shall accrue to Sun Pharma, it noted.
On Monday, Sun Pharma announced it will fully acquire Ranbaxy in an all-stock transaction with a total equity value of $3.2 billion. This included a debt of $800 million, thus taking the overall deal value to $4 billion.
Though brokerages and the stock market gave a thumbs-up to the deal, the surge in the Ranbaxy share price before the announcement of the deal had led to concerns that some entities might have had prior information of the buyout.
The Securities and Exchange Board of India (Sebi) has also sought details of the share transactions made in the Ranbaxy counter before the deal was communicated to stock exchanges. The market regulator may also seek details from Sun Pharma as to who were privy to the deal.
Sebi’s move came after it received multiple complaints about alleged irregularities in the trading of Ranbaxy shares before the merger announcement. Shares of Ranbaxy had witnessed substantial movements on the exchanges last week.
From March 31 to April 4, shares of Ranbaxy jumped 26 per cent. The scrip today closed at Rs 467 on the BSE.
US phase-out plan
Sun Pharma plans to phase out sales of generic drugs branded as Ranbaxy products in the US, according to a Reuters report.
Ranbaxy drugs sold in the United States will be gradually rebranded as Sun Pharma treatments as part of a strategy to turn around the company. The brand is likely to continue to be present in other markets.
The plan to phase out the brand in the US will be part of a slew of changes at Ranbaxy, including an intense lobbying push with the US Food and Drug Administration to lift the ban on imports from Ranbaxy’s India plants over production quality concerns, the sources said.
Meanwhile, exports from Ranbaxy plants at Toansa and Dewas to Europe will remain suspended as probes are continuing even as Indian authorities have withdrawn the certification of manufacturing standards from one of the units, European health regulator EMA said today. The European Medicines Agency (EMA) said Indian authorities have withdrawn certification to the Toansa plant, while an international inspection of the Dewas plant has been planned for June.