Cadila Healthcare to demerge consumer products division into Carnation, merge Zydus Hospitals with itself

Ahmedabad-based Cadila Healthcare Ltd has announced that the board of directors yesterday approved the the restructuring of its consumer products division.

The composite scheme of arrangement for demerger of the consumer products division of Cadila into Carnation, would see Carnation allot the shareholders of Cadila Healthcare four fully paid-up equity shares of Rs10 each for every 15 equity shares of Rs5 each they hold in Cadila Healthcare.

After the schemes becomes effective, Cadila's own stake in its 61.56-per cent listed subsidiary Carnation Nutra-Analogue Foods Ltd will rise to a little over 70 per cent.

Cadila is undertaking a major restructuring exercise that would see the merger of its majority shareholder Zydus Hospital and Medical Research Pvt Ltd, into itself in exchange for 100.9 million shares.

The company said that the shareholders of Carnation will gain due to the increase in size of operations and benefits of scale, besides synergic benefits, both in marketing through media and an enriched and efficient distribution network.

It said the grouping of same line of businesses into a single entity will greatly optimise the strengths of the company`s consumer business, which can now be more effectively leveraged. This restructuring would also facilitate better alignment of assets with priorities to accelerate the consumer business. The process is slated to be completed by early 2009.

Under the proposed scheme, all assets and liabilities of the consumer products division of Cadila Healthcare will become the assets and liabilities of Carnation with effect from 1 April 2008 and all assets and liabilities of Zydus Hospital and Medical Research will become the assets and liabilities of the Cadila, with effect from 1 July 2008.

90 million equity shares held by Zydus Hospital and Medical Research into Cadila Healthcare will get cancelled and as consideration, Cadila will allot 100,885,305 fully paid-up equity shares of Rs5 each to the shareholders of Zydus Hospital and Medical Research.