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Novartis may buy 39% in Indian arm at Rs 351/sh

The parent company of Novartis is set to buy 39% additional stake in its Indian unit, which will take its stake to 89–90%. It is offering Rs 351 per share. However, there is no indication from the company with regard to delisting. CNBC-TV18's Archi Damania reports.

With regards to delisting there is no intimation from the company on whether the company will be de-listed or not. We spoke to a few people who said that, possibly, the company falls into a 10% free-float requirement. However, at the moment the comment from the company is that it has not given any intimation as to whether it will be listing or delisting it.

The parent company is offering Rs 351 per share for Novartis India, which is higher than the 52-week high that it hit in May 2008. At Rs 351, the price to earnings ratio works out to be 10 times its current year earnings. The company is looking at consolidation of its holdings. So getting the stock at lower price is not exactly the game. The company says it is looking to consolidate their subsidiaries. Globally too, Novartis wholly owns most of its subsidiaries. 

But the concern in Novartis and all other MNC pharma companies has been that new launches, which happen from the parent portfolio do not happen in the listed subsidiary. So the revenue will go to the unlisted subsidiary in any case.

Some key institutional holders in the company areReliance Capital Trustee Company that holds about 5% in this stock. Other insurance companies that are generally long-term investors like LIC, which holds about 5.5%. Then there is General Insurance, Oriental Insurance, Bajaj Allianz and in his individual capacity, [Wipro chief] Azim Premji too holds about 2.3% in Novartis.

Coming to the delisting issue, as of now, the company has indicated that it has not decided on whether they are looking at delisting or not and will look at it at a later date only.

Source: Money Control

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