Bangalore-based Strides Arcolab Ltd today said it will pay a special dividend of Rs 500 per equity share following the completion of its USD 1.75 billion sale of Agila Specialties division to Mylan Inc.
The company, which had originally proposed a distribution of USD 700 million to USD 800 million (pre-tax) to shareholders, said its board today approved a special dividend of Rs 500 per share of face value Rs 10 each, resulting in a pre-tax distribution of approximately USD 550 million.
Commenting on the development, Strides Arcolab founder and group CEO Arun Kumar said: "We are delighted that we could create value for the shareholders returning 88 per cent of the free cash available with the company by way of a special dividend."
In a statement, the company said an additional amount of USD 250 million was held back due to the warning letter received by Agila for one of its injectable manufacturing sites in Bangalore.
It will be paid in whole or part to Strides by Mylan upon satisfaction of certain regulatory conditions related to its injectable facilities in India.
"The company had engaged with the USFDA prior to the closure of the transaction and expects satisfactory resolution of the regulatory conditions and those contingent conditions will be satisfied sometime in 2014," it said.
Further, the company in collaboration with Mylan had agreed to bring in third party consultants to oversee remediation actions and the company has set aside funding for these costs, it added.
Strides Arcolab said there has also been certain revisions in the transaction that was announced in February this year.
"The aggregate base consideration payable at closing of the transaction was USD 1,600 million subject to customary closing adjustments. In addition, a sum of USD 250 million was payable at or following the closing of the transaction based on satisfaction of certain conditions."
In September, the USFDA had issued a warning letter to Agila Specialties over violation of manufacturing norms in one of its plants in Bangalore following an inspection in June.
Earlier in the same month, the government had approved Mylan's