After due diligence of both the business entities the PricewaterhouseCoopers (PwC) has recommended the swap ratio.

Both the companies will approach AP High Court and shareholders seeking their approvals and the merger is proposed to be effective from April 1, 2000, stated the company release.

In the merged company Dr Reddy's Holdings, a holding company will have a stake of 27.59 per cent and in the individual capacity Anji Reddy and family hold 3.86 per cent. Currently the holding company held 25.40 per cent in DRL and 35.34 per cent in CDL.

DRL board has also decided to issue employees stock options to the extent of 7,50,000 equity shares. The details of the scheme will be worked out after the merger, said the company statement.

The merger will make DRL group the third largest pharmaceutical player in India, and give the company entry into value added generics business in the regulated markets for finished dosages forms. In a statement Dr Anji Reddy Chairman of the group said, "The merger gives me a feeling of having arrived. We are in the big league now, third only to Ranbaxy and Glaxo. So far, we enjoyed the leadership for basic research; now we have the size as well." The cultural identities of the three individual constituents-DRL, CDL and American Remedies-are well-matched, he added.

"The group will go in for a reorganisation of its board shortly," DRL chairman Dr Anji Reddy told The Financial Express. Consultants have been appointed for the purpose and they are expected to submit their report soon, he said. Achieving a Rs 1000 crore turnover next year is no big deal considering we are already at Rs 900 crore, he added indicating he had set his sights much higher.

In the post-merger, DRL will enjoy a unique position with its operations ranging bulk actives, intermediates, finished dosages, custom chemical synthesis, diagnostics and biotechnology, said the company.