DRL, Cheminor approve 9-25 swap ratio

DRL, Cheminor approve 9-25 swap ratio

HYDERABAD, MAY 31: The board of directors of Dr Reddy's Laboratories (DRL) and Cheminor Drugs (CDL), in a separate meetings held here on Wednesday, have approved the merger of both the companies and finalised the swap ratio as 9:25 (nine shares of DRL for 25 shares of CDL).

After due dilignence of both the business entities the Pricewaterhouse Coopers (PwC) has recommeded 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.

In the merged company Dr Reddy's Holdings, a holding company will havea stake of 27.59 per cent and in the individual capacity Anji Reddy andfamily hold 3.86 per cent. Currently the holding comapny 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 theextent of 7,50,000 equity shares. The details of the scheme will beworked out after the merger, said the company statement.

The merger will make DRL group the thrid largest pharmaceutical playerin India, and give the company entry into value added generics businessin 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 indentities of the three individual constituents - DRL, CDL and American Remidies - are well-matched, he added.

"The group will go in for a reorganisation of its board shortly," DRL chairman Dr Anji Reddy said. 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 operationsranging bulk actives, intermediates, finished dosages, custom chemicalsynthesis, diagnostics and biotechnology, said the company.