The Delhi High Court on Tuesday accepted Japanese drugmaker Daiichi Sankyo’s plea to hear an application to block a proposed sale of shares in Indian hospitals chain Fortis Healthcare by promoter brothers Malvinder Singh and Shivinder Singh. The court will hear the case next on January 23.
The Delhi HC today noted the Singh brothers’ reiteration of their earlier verbal commitment that they will not pursue any plans to sell stake in Fortis. The court did not ask for a written commitment. Singh brothers had contended that they are not selling any stake, but are merely looking to infuse capital into the company, as per some media reports. However, today’s developments in the court have prevented the Singh brothers from diluting their stake in any manner at least till January 23.
Daiichi Sankyo had acquired a majority stake in Indian drugmaker Ranbaxy Laboratories Ltd – then promoted by the Singh brothers – for Rs 22,000 crore. However, soon after, the Indian company came under the scrutiny of the United States Food and Drug Administrator for non-compliance with the manufacturing standards for exporting drugs to the US. The company faced huge fines and sharp erosion in valuation.
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Daiichi Sankyo – the new owners of Ranbaxy – agreed to pay $500 million to settle a lawsuit and the US federal charges, but sought legal recourse to recover the amount from previous promoters – the Singh brothers. Earlier last year, a Singapore tribunal ordered the Singh brothers to pay $385 million to Daiichi Sankyo towards compensation.
The Japanese company moved the court again after that – this time in India – seeking freezing of Singh brothers’ assets in order to be able to recover its compensation award. While, the Delhi HC is due to hear arguments in that case later in March 2017, Singh Brothers got bid from TPG Capital to sell controlling stakes in Fortis Healthcare and SRL-Fortis Malar Hospitals for Rs 3,000 crore.
It is this sale of stake that Daiichi Sankyo wants to prevent now. It must be noted that Daiichi Sankyo is no longer the owner of Ranbaxy. It sold the company to another Indian pharmaceutical giant Sun Pharma for $3.2 billion in 2014.