The Hindu Business Line : Enough support to thwart take-over moves: Orchid

Mumbai, April 8 The race to acquire Orchid Chemicals and Pharmaceuticals hotted up on Tuesday with the promoters of Chennai-based Apollo Hospitals understood to be evincing interest in picking up stake in the pharma company. This comes as the Chennai- based Orchid faces a reported hostile bid from a Ranbaxy outfit - Solrex Pharmaceuticals.

It is learnt that nearly three lakh Orchid shares were picked up from the open market on Tuesday and the top management was in touch with the Orchid’s Managing Director, Mr K. Raghavendra Rao. Apparently, Dr Prathap C. Reddy, who introduced the concept of corporate hospitals in India in the mid-1980s, wants to strengthen the position of the health-care giant, particularly in the background of Fortis Healthcare, a Ranbaxy-promoted group company, taking a stake in Chennai-based Malar Hospitals last year.

According to a source, Dr Reddy spoke to Mr Rao on Tuesday expressing interest in buying a controlling stake in Orchid. Significantly two senior doctors of Apollo Hospitals – the Chief of Cardiothoracic Surgery, Dr M.R.Girinath, and Senior Anaesthesiologist Dr S. Naidu - are on the Board of Directors of Orchid Chemicals right from its inception.

Mr Rao’s troubles began a few weeks ago after the American financial giant Bear Stearns, on its way to bankruptcy, had offloaded one million shares of his company. On March 17, the Orchid share tanked by 38 per cent to around Rs 110 as the promoter was forced to sell seven per cent of his holding in response to margin calls for the large chunk of shares he had pledged with Indiabulls and Religare (an arm of Ranbaxy), to raise money for the Orchid warrants he had bought 18 months ago to increase his stake in the company to 25 per cent.

Mr Rao, however, said that he was confident of thwarting any attempt to take over the company. “There is enough support from the existing shareholders,” he told Business Line. “They have always done so,” he added. He denied that he had met or spoken to anybody from Ranbaxy. He also denied any knowledge of Apollo Hospitals being interested in Orchid.

Ranbaxy overtures

The new turn to the Orchid story comes even as Ranbaxy Laboratories’ Chief Executive Officer, Mr Malvinder Mohan Singh, reiterated that consolidation was long overdue in the domestic pharmaceutical market. It was necessary for companies to get into more partnerships and licensing collaborations, he told Business Line, unwilling, however, to comment on specifics regarding his company’s reported interest in Orchid. In the past, Mr Singh had told the correspondent that “soft” reasons, indicating family-run companies, were inhibiting the pace of acquisitions in the local market.

Meanwhile, Solrex further increased its stake in Orchid on Tuesday up to over 11 per cent from 8 per cent. All eyes are now on whether Solrex will up its stake further to touch the 15 percent mark that will in turn trigger off a mandatory open offer for shareholders of Orchid.

Eyeing cephalosporin

Orchid’s antibiotic cephalosporin injectibles could be of direct interest to Ranbaxy, or it could be to secure supply for its retail chain floated under Fortis Healthcare, a pharma industry official observed.

But Ranbaxy’s entry into the fray had nothing to do with Indiabulls’ recent sale of Orchid shares in the market, the broking-firm said. “For us it was a pure financial deal and we had sold the shares in the open market three weeks ago,” a senior company official said.

Related Stories:
Solrex Pharma ups stake in Orchid Chem to 8%

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page