Multinational companies planning to delist their stocks from Indian stock markets got a shot

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in the arm on Monday with US drug maker Mylan announcing that its wholly-owned subsidiary MP Laboratories (Mauritius) has completed its delisting offer for the publicly held shares of Hyderabad-based Matrix Laboratories.

Mylan, which acquired controlling interest in Matrix Labs in 2007, said the public shareholding will fall below 8 per cent after substantial number of shares were tendered at or below the discovered price (through reverse book building) of Rs 211 per share.

This is still below the Monday’s closing price of Rs 208.95 on the Bombay Stock Exchange (BSE). The month-ago closing price for the stock was Rs 150, which means handsome gains for investors who accepted the delisting offer.

An investment banker at Citigroup, which was manager for the offer, said the remaining shareholders – both physical and dematerialized shareholders – who have not participated in the offer, will be allowed an exit opportunity for a 15-day period from June 4-18. Acquirers will also accept shares at the exit price from remaining shareholders for six months after the delisting of the shares from BSE and the National Stock Exchange.

Prior to the delisting offer, Mylan through its subsidiaries held 76.13 per cent stake in Matrix Labs. Foreign institutional investors (FIIs) held 15.46 per cent and domestic institutions had 0.28 per cent stake. Retail investors held only 5.34 per

cent stake.

A back-of-the-envelope calculation puts Mylan investment to increase its stake above the 90 per cent level at nearly Rs 513 crore. Officials said more than 30,000 investors have not participated in the offer and hoped that they would tender their shares at the exit window offered by the company.

In a statement issued in Pittsburgh, Mylan’s chairman and chief executive officer Robert J Coury said the delisting process was a positive development. “Not only is the transaction immediately accretive to Mylan, it enhances the ease of operations between the companies and increases operational efficiencies,” he said. Mylan will initiate steps to delist Matrix from the Indian stock exchanges, after which Matrix will become a privately held subsidiary, Coury added.

The success of Mylan’s delisting offer has raised hopes for similar delisting offers from multinational companies if offered at a good premium to the ruling price.

Last week, Swiss drug maker Novartis AG raised its offer price for acquiring a 39 per cent stake in Novartis India from Rs 351 per share to Rs 450, an increase of 28 per cent. The company will spend nearly Rs 561 crore for the share purchase. The offer closes on June 8.

However, investors of Pfizer India are yet to get similar hike in offer price from its US parent Pfizer Inc, despite the fact that the offer price is at a discount of nearly 17 per cent from the ruling price.