Andhra High Court lifts stay on Sun Pharma and Ranbaxy merger

Tags: News
The Andhra Pradesh High Court has lifted the status quo order it had earlier passed over the merger of Sun Pharma and Ranbaxy and asked SEBI to complete investigation over the insider trading aspect in an appropriate time.

Justice G Chandraiah on Saturday said the court has vacated the stay order as merger and insiders trading were different matters, and the merger may not be halted as SEBI can continue probe. The petition was disposed off by the court and petitioners too were satisfied with the court asking SEBI to complete the probe at the earliest.

Following this petition at the end of April, filed by two retail investors, the High Court last month had asked BSE, NSE and SEBI to halt the merger. The petitioners had then said because the share price of Ranbaxy went up by 20 per cent a week ahead of the deal coupled with high volume trading, there were strong chances of malpractices.

On April 6 this year Sun Pharma announced its plans to merge with Ranbaxy to together become the fifth largest generic company in the world. The all stock deal is pegged at $ 3.2 billion. Sun Pharma has hopes to garner revenues around $ 250 million after three years of the merger.

In their arguments on Friday, Sun Pharma counsel had said that SEBI is already looking into the aspect of insider trading and if any persons are involved on behalf of both the companies. This would not require the merger to be halted.

Petitioners later requested the court to direct SEBI to investigate into the matter and take appropriate action against Sun and Ranbaxy, if found guilty.

Typically, a merger involves fetching a go ahead from respective High Courts (where the parties are located) and stock exchanges SEBI, Competition Commission of India and shareholders of both the companies. The Sun – Ranbaxy deal will seek a nod from High Courts in Punjab, Haryana and Gujarat.

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