Ranbaxy to buy 14.9% stake in API maker Krebs

NEW DELHI: Ranbaxy Laboratories, the largest pharmaceutical company in the country, is picking up a 14.9% stake in Krebs Biochemicals & Industries in a deal worth Rs 9 crore. The acquisition falls just short of the trigger point of 15%, which calls for a mandatory open offer for a listed company in India. Interestingly, the promoter of Dr Reddy���s Laboratories, Anji Reddy is holding a 5.1% stake in Krebs in his personal capacity.

Krebs, a small Hyderabad-based publicly listed company promoted by its managing director RT Ravi, is engaged in the business of manufacturing active pharmaceutical ingredients (API). The company, which had fallen into the red in the last fiscal, has a market capitalisation of about Rs 57 crore. It posted sales of about Rs 40 crore for the first nine months of FY07.

Ranbaxy would be picking up the equity through a preferential allotment at Rs 85 per share. Krebs��� board had approved the allotment in its meeting held on January 15, 2007. The Krebs scrip moved up 4.98% to close at Rs 99.05 on Wednesday at the BSE. The stock has shot up 26.42% over the past week.

However, an immediate takeover of Kerbs by Ranbaxy appears unlikely. Krebs��� board has also approved the issue of 20 lakh warrants to the promoter group and selected investors to be converted into equity at Rs 74.3 per share within 18 months from the date of allotment.

If all the warrants are issued to the promoters, their stake would go up from 45% as of September 30, 2006. And upon conversion of this warrants Ranbaxy���s stake in Krebs would come down to about 11.6%.

The Ranbaxy board is meeting on Thursday for the earnings announcement and it is expected that the issue may come up for approval at the meeting. It is not clear if Ranbaxy plans to hike its stake beyond this level. ���Ranbaxy plans to acquire 14.9% stake in Krebs Biochemicals subject to approval by the board,��� said a Ranbaxy spokesperson. Last year Ranbaxy had expanded its in-house API manufacturing capacities by acquiring the Gwalior-based Cardinal Drugs. Ranbaxy has two manufacturing units for APIs in India, at Mohali and Toansa in Punjab.