Novartis rules out delisting, completes open offer

Novartis has successfully managed to close an open offer to buy shares in its Indian unit from other minority shareholders, but the Swiss-based drugmaker rejected suggestions it could soon join a growing list of multinational drugmakers opting to delist their local arms.

The company, which already owns a 51% stake in Novartis India, told ET Now that it had no plans to delist its Indian arm, and a spokesperson said results of the open offer aimed at raising its stake to at least 90% would only be known next week. The open offer, which closed on June 8, received a good response from investors, with 90% of the investors holding more than 1% of the firm���s equity tendering their shares, I-bankers who handled the transaction said.

Big investors, who between them hold about 21% of the company, include LIC, Reliance Capital, Bajaj Allianz Insurance Co, GIC and Azim Premji of Wipro. Mr Premji owns a 2.3% stake in the company. Novartis offered to pay Rs 450 a share at the open offer, which was managed by Merrill Lynch and was aimed at buying a 39% stake.

Analysts cite several reasons for this growing trend among MNC drugmakers to raise stakes in their Indian arms.
���The offers...to increase holding in their Indian subsidiaries were made at a time when stock prices were low. It was a good opportunity. Moreover, MNC parent companies will have more control over cash reserves of their Indian arms, as they increase their holdings,��� Ranjit Kapadia, vice-president for institutional research at HDFC Securities said.