The unfolding Solrex Pharma-Orchid Chemicals story saw a new twist on Wednesday with Ranbaxy making it clear it did not believe in hostile takeovers, without specifically mentioning any company. This came even as the promoters of Orchid were involved in backroom huddles to ward off a possible takeover bid.
A Ranbaxy spokesperson said in New Delhi that the company, in principle, doesn’t believe in hostile takeovers. On being asked specifically about reported attempts by Solrex to increase its stake in Orchid, the spokesperson refused to comment. Ranbaxy also refused to divulge the nature of its relationship with Solrex, a firm reportedly promoted by the Ranbaxy owners. Solrex had reportedly acquired over 12% in Orchid by Wednesday.
Not surprisingly, Orchid stock, which witnessed a dramatic run until Tuesday on speculation of possible takeover battle, slumped as soon as the Ranbaxy statement became public. Nevertheless, Orchid stock generated huge trading interest on Wednesday, with the counter clocking volumes of 2.53 crore shares. The scrip ended over 3% lower at Rs 232.60 on the BSE.
Meanwhile, one of the possible options for the Orchid promoters at this time is to exercise the 50 lakh warrants issued early last year?approximately 7.6% of additional equity?said sources. ?Yes. We have 50 lakh warrants issued early last year to increase the promoters’ stake. Under regulatory norms, we made an upfront payment for 10% of conversion cost (Rs 202 a share) at that time of allotment and have to pay for the remaining at Rs 182 a share,? Orchid MD K Raghavendra Rao told FE in Chennai.
Asked whether the promoters would exercise their warrants to ward off the takeover threat, he said: ?We have not yet decided on that. We have time until August and we want to wait and see.?
In response to whether he would be talking to Ranbaxy, Rao said: ?We have not heard anything from Ranbaxy officials so far and it is hypothetical whether we will hold talks with them if they approach us for a negotiated deal.?
Meanwhile, the Apollo Hospitals group, rumoured as a possible white knight, ruled out picking up a stake in Orchid. Suneetha Reddy, director (finance), said: ?We are not interested in Orchid.?