May 25, 2014 1:19:12 am
The Andhra Pradesh High Court on Saturday vacated its earlier status quo order on the merger process between Sun Pharma and Ranbaxy Laboratories, paving the way for the merger of both companies.
Justice G Chandraiah also disposed of the petition filed by two individual investors — Tammali Shiva Kumar and Undi Venkatasubbaraju — requesting the High Court to restrain the stock exchanges from giving any clearance to the merger between Sun Pharma and Ranbaxy Laboratories.
The court last month had ordered an ‘interim status quo’ on the deal, pending a decision on a petition for a probe into alleged insider trading.
Sun Pharma had on April 6 announced that it would fully acquire Ranbaxy in an all-stock transaction with a total equity value of $3.2 billion, along with a debt of $800 million, taking the overall deal value to $4 billion.
“Our main grievance is that Sebi has not taken any action on insider trading. Since Sebi has come before the court and said it will take action, the stay is vacated by the court,” K Vivek Reddy, counsel for the petitioners, said.
On Friday, the AP High Court heard the petitions of Sun Pharma, Ranbaxy, Sebi and the two individual investors who got a stay against the Sun-Ranbaxy merger move for alleged insider trading.
The petitioners had requested the High Court to grant an interim stay, as they suspected insider trading in Ranbaxy shares before the merger with Sun Pharma was announced on April 6.
As per the statement submitted to the court, more than 70 lakh Ranbaxy shares were traded before the merger was announced, pushing the share price by over 25 per cent.
Justice G Chandraiah said there was no need for a status quo on this issue as Sebi is already inquiring into these allegations of insider trading and the process of merger was outside the purview of this investigation.
The judge disposed of the petition at the behest of the petitioners’ counsel, stating that no further action was necessary as the inquiry was underway.
Justice Chandraiah also refused to set a time frame for the inquiry as suggested by the petitioners’ counsel K Ramakrishna Reddy.
Sebi counsel Y Suryanarayana opposed the suggestion, saying that there cannot be any time frame for the said inquiry since the regulator has to follow a set procedure to complete the investigation. However, the stock exchanges are yet to forward their opinion on the merger issue to the market regulator. FE
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