AP High Court vacates stay on Ranbaxy-Sun Pharma merger
24 May 2014
The Andhra Pradesh High Court has vacated a stay on the proposed merger of Ranbaxy Laboratories with Sun Pharma and disposed of a case filed by two investors seeking an investigation into alleged insider trading in Ranbaxy shares ahead of the merger announcement.
The Supreme Court had, on Wednesday, criticised the manner in which the merger was stayed the Rs24,000 crore ($4 billion) merger of Ranbaxy with Sun Pharma and had directed the Andhra Pradesh High Court to decide the issue within two days (See: SC blasts manner of stalling Sun-Ranbaxy merger).
The High Court had passed the order on a petition filed by two individual investors who alleged that there was heavy trading in Ranbaxy stock before the merger with Sun Pharma was announced on 6 April (HC blocks Ranbaxy-Sun Pharma merger over insider trading allegations) .
Silverstreet Developers, a firm owned by two 100-per cent subsidiaries of Sun Pharma, had picked up 1.41 per cent (59,67,542 shares) of Ranbaxy during the December quarter of FY14 and raised its shareholding to 1.64 per cent (69,67,542 shares) during the March quarter, according to stock exchange data.
The two investors argued that since Silverstreet was owned by Sun Pharmaceuticals, ''all the benefits flowing from the investment in Ranbaxy shall accrue to Sun Pharma''.
They had sought a court directive to Sebi to investigate the insider trading in Ranbaxy shares and take appropriate action against Sun Pharma and Silver Street.
Hearing on the petition requesting the court to direct Sebi to investigate insider trading related to the merger, however, had become redundant since the market regulator on its own initiated a probe and had sought details of the merger deal from Sun Pharmaceutical Industries.
Counsel for Ranbaxy denied all allegations of insider trading and argued that there was no link between insider trading and the merger deal and that the market regulator had already initiated a probe into the deal.
Sebi had also informed the court that it had initiated an investigation into insider trading charges against Ranbaxy.
