Sun Pharma announces buyback plan at Rs 900 per share

MUMBAI: India’s largest drug maker by market capitalization announced its board of directors approved a share buyback plan at Rs 900 per share through a tender offer for a maximum of 7.5 million equity shares. The plan will roughly cost the company Rs 675 crore.

The buyback price comes at a 16 per cent premium over Rs 752, the closing price of Sun Pharma on Thursday at BSE. In a late evening statement, Sun Pharma said the buyback, where promoters will also be participating, is being undertaken by the company to return surplus funds to the equity shareholders and thereby, enhancing the overall returns to shareholders.

The buyback mechanism will be based on a proportionate ratio to be called through a tender offer. “As per SEBI guidelines, 15% of the buyback offer is reserved for shareholders holding equity shares having market value of not more than Rs. 200,000 as on the record date.

Surajit Pal, analyst at Prabhudas Lilladher described the plan as a “non-event” adding the size of the buyback exercise is too small. “The plan is probably to save on the dividend tax imposed on dividends payouts of over Rs 10 lakh,” said another analyst.

Sun Pharma had consolidated revenues of $4.3 billion for the last financial year, of which US sales contributed $2.1 billion.