This saga should give Ekta kapoor a complex for the twists and turns and the never ending nature of its existence.
Circa Oct 2007
Ranbaxy enters into a definitive agreement to increase its stake in Zenotech to 45% by purchasing of shares from promoters and preferential offer.
Jan 2008
Ranbaxy completes open offer and acquires 2.2% shares through the open offer at a price of Rs 160 per share. Ranbaxy’ stake goes upto 46.79%.
June 2008
Daiichi buy’s out Ranbaxy from the Singh brothers and hence becomes owner of the 46% owned by ranbaxy in Zenotech which results in triggering of the open offer due to the indirect acquisition.
Jan 2009
Daiichi makes a open offer to acquire 20% from the public shareholders at a price of Rs 113. 62 per share.
The promoter Dr Jayaram Chigurupati claims that Daiichi had in a meeting promised to pay Rs 160 to the shareholders.
The battle begins
Dr Chigurupati and retail shareholders file cases in the court and with SEBI to ensure that the open offer happens at Rs 160.
Feb 2009
SEBI dismisses the case and Daiichi prepares to rollout the open offer at Rs 113. Dr Chigurupati and the retail shareholders take the case to SAT.
Oct 09
SAT rules in favour of the retail shareholder and directs Daiichi to do the open offer at Rs 160.
Nov 09
Case is also filed in SAT to ensure that Daiichi pays interest for the delay
Daiichi takes the case to supreme court and agrees in Supreme court to pay interest in case it loses the case.
The supreme court has decided that Dec 02 2009 will be the final date of hearing and the judgement should follow.
There are of course multiple cases being fought between Daiichi/ Ranbaxy and Dr Chigurupati in the CLB also.
Where do we stand now
Current shareholding
Dr Chigurupati & associates - 25.76%
Ranbaxy - 46.85%
Public shareholders - 27.39
Precedence suggests that Supreme Court tends to go with SAT order though precedence is no guarantee.
1) Supreme Court rules in favour of retail shareholders
Open Offer Price - Rs 160 + Rs 10 ( approx interest) = Rs 170
2) Supreme Court rules in favour of Daiichi
Open offer prices - Rs 113.
CMP - Rs 115
I had bought stock in the Rs 108-112 levels. The way I see it is the downside is restricted to around 8-10 bucks where as the upside could be around Rs 140-150 on the stock, with the information that SAT ruled in favour of the retail shareholders.
The most important thing is that this long drawn saga will come to an end with clear defined timelines.
To take a quote that I like from “ The curious case of Benjamin Button”
“Life can only be understood looking backward. It must be lived forward.”
Wednesday, November 18, 2009
The curious case of Zenotech Labs
Subscribe to:
Post Comments (Atom)
6 comments:
Hi Ninad,
Very interesting interpretation of regulations! You should go through the SAT order in case you haven't (link below). Although I am no legal expert, I think Dr. Chigurupati has a strong case and there seems to be a very strong possibility of the ruling going in favour of minority shareholders. However, I think you are being a bit bullish on the upside. With acceptance ratio of about 40%, the share price seems likely to settle around 135. On the downside, it could settle around Rs. 100. Nevertheless, it definitely seems a risk worth taking.
http://www.sebi.gov.in/satorders/jayaram.pdf
Regards,
Amit
Hi Amit
I have reviewed the legal case both on the SEBI site and opinions on the order. Its really a matter of interpretation and hence becomes a interesting case because it will lead to setting a precedence. I didnt dwell on it in the post bcos then the post would have become very lengthy. Will maybe put another post on this and on your second query.
Regarding the upside bit of it, as opposed to saying that the upside on the stock price would be around Rs 140-150, I by mistake stated upside of Rs 40-50. i have rectified it in the post.
This case is not just a good case study on corporate disputes or interpretation of the law, but is also a good case study of game theory where each of the participants could act differently at various scenarios. My belief is that we will have a higher acceptance ratio.
Will try covering this in my next post on this.
Cheers
Ninad
Hi Ninad,
Have there been any developments in this case? I can't locate any news relating to the case? Has the ruling been postponed?
Regards,
Amit
Hi Amit
The case didnt come up for hearing on the 2nd. It was slated next to be up from hearing betweem 8-10th of Dec.
The supreme court has listed this down but doesnt give any update whether the hearning happened. I would assume it would take a day or two for the judgement even if the hearning has taken place.
The case number is 7148 under the civil appeal section.
Cheers
Ninad
Hi Ninad,
Any updates on the case?
Regards,
Manoj
Hi Manoj
No update as of now.The final judgement is still awaited.
Cheers
Ninad
Post a Comment