Orchid Pharma Ltd and Dhanuka Laboratories Ltd to merge

The Board of Directors of Orchid Pharma Limited ("the Company") at its meeting held today, i.e., December 16, 2021, has considered and approved a draft Scheme of Amalgamation and Arrangement between Dhanuka Laboratories Limited ("DLL"), the Company and their respective shareholders and creditors, as may be modified from time to time ("Scheme") under Sections 230 to 232 of the Companies Act, 2013.

DLL is engaged in the business of manufacturing and marketing of diverse bulk actives and formulations of various drugs.

The rationale for merger:

• The Resolution Applicant plans to merge into the Corporate Debtor after the acquisition, which will result in creation of much larger company which will have a potential to reach a sales turnover of up to Rs. 1400-1500 crores with EBITDA of Rs. 200 to Rs. 250 crores, thereby creating a high value company in the future."
• Amalgamating Company and Amalgamated Company are engaged in the similar business. The amalgamation will ensure focused management in the combined entity thereby resulting in efficiency of management and maximizing value for the shareholders.
• The proposed amalgamation in accordance with the terms of this Scheme would enable both the companies to realize benefits of greater synergies between their businesses, achieve wider product offerings and geographical footprints, consolidating operations thereby leveraging the capability of Amalgamated Company, yield beneficial results and pool financial resources as well as managerial, technical, distribution and marketing resources (including stronger market presence) of each other in the interest of maximizing value to their shareholders and the stakeholders
• - This enhanced value maximization shall result in a stronger balance sheet which will attract investors
• Ensuring a streamlined group structure by reducing the number of legal entities in the group structure, and thereby eliminating inter-company transactions, administrative duplications and consequently reducing the administrative costs of maintaining separate companies
• The amalgamation would result in improved competitive position of the Amalgamated Company as a combined entity and achieving economies of scale.

Upon coming into effect of the Scheme and in consideration for the Amalgamation of DLL into and with the Company pursuant to the Scheme, the Company shall, without any further act or deed and without receipt of any cash, issue and allot to the shareholders of DLL as on the Record Date 63 equity shares of Rs. 10 each for every 2 equity share of Rs. 100 each of DLL.

The Scheme is subject to receipt of approvals from the shareholders and creditors of the each of the companies as may be directed by the jurisdictional National Company Law Tribunal ("NCLT"), BSE Limited, National Stock Exchange of India Limited and approval of other regulatory or statutory authorities as may be required.

Shares of Orchid Pharma Limited was last trading in BSE at Rs. 404.10 as compared to the previous close of Rs. 408.65. The total number of shares traded during the day was 1256 in over 57 trades.

The stock hit an intraday high of Rs. 407.95 and intraday low of 398.00. The net turnover during the day was Rs. 503496.00.

Source : Equity Bulls

Keywords

OrchidPharma INE191A01027 Merger DhanukaLaboratories