FIs respond to Novartis’ open offer

MUMBAI: Institutional shareholders have participated in a big way in Novartis AG���s open offer for its Indian subsidiary Novartis India, boosting the possibility of the success of the issue, a person close to the offer said. He said the exact participation by the institutional shareholders, which have a combined stake of 21%, will be known by this week-end. The issue closed on Monday. The institutional shareholders include LIC, with a holding of 5.7%, Reliance Mutual fund and private insurer Bajaj Allianz.

The offer, which aims at scaling up the Swiss pharma giant���s stake by 39% to 90%, had attracted a ���good��� response from institutional shareholders after the offer price was increased, the person said. Novartis had hiked the offer price to Rs 450 a share, almost Rs 100 higher than its earlier offer price of Rs 351 per share and a premium to the current market price. The shares of Novartis India lost 2.63% to close at Rs 409.40 on Monday in a weak Mumbai market.
Novartis saw a lot of shares being tendered in the last few days of the offer, which was managed by DSP Merrill Lynch. An email sent to Novartis AG did not elicit a reply.

Analysts said that the Swiss giant did not overpay. ���If you want a controlling block, you have to pay a premium. The revised price that Novartis offered was at a premium, but was not excessive,��� said a pharma analyst.

At the new price, it will cost the company Rs 560.9 crore, should the open offer be fully subscribed.

If the open offer succeeds, the company may look at de-listing Novartis India. The Novartis AG spokesperson however had told ET last month, ���That was not part of the plan when the offer was made.���