Mumbai, Oct. 13: The Hyderabad-based Dr Reddy’s Laboratories (DRL) is likely to make a follow-on American depository receipts (ADR) offer of up to $250 million.

Sources said the objectives of the issue were to build a war chest for buyouts and cut debts that had increased after the acquisition of German company Betapharm.

In February, DRL became the fourth largest generic company in the world with the acquisition of Betapharm, the leading generics maker in Germany, for 480 million euros or Rs 2,550 crore.

The proposed ADR issue will bolster DRL’s finances, which took a knock post-Betapharm as the company had to fund the acquisition through a mix of own resources, which reduced its reserves, and debt. Senior company officials had hinted at raising funds for better financial security.

When asked about the issue, a company spokesperson refused to comment. “As a matter of company policy, we do not comment on market speculation,” she said.

However, she said the company had obtained permission from its shareholders to raise funds and was “exploring various financing options’’.

At the annual general meeting of the company in July, there was a proposal to raise funds from abroad. An ADR issue is doing the rounds of the market in the past one month.

DRL this week settled a patent dispute with GlaxoSmithKline plc over the later’s imitrex tablets that are used as a cure against migraine.

The company plans to launch the generic drug in the last quarter of 2008, ahead of the expiry of the patent in February 2009.

Imitrex notched up sales of $890 million for the 12 months ended June, 2006.

DRL had entered into a similar arrangement with Merck in June this year for the sale of Merck’s Proscar and Zocar tablets.