News of takeover war in Ranbaxy seems surprising

CNBC-TV18s Executive Editor, Udayan Mukherjee - News of takeover war in Ranbaxy seems very surprising because if indeed it is happening it would be terribly hostile. So I do not know what Pfizer is thinking if indeed they are going to throw their hat in the ring because Malvinder Singh has done a 35% sell deal with Daiichi. So that block is out. Would Pfizer be able to run this company with a 35% shareholder that is somebody else either a multinational company or Malvinder Singh? That is a very hostile kind of situation and if that turns out to be the case, LIC has been a bit of a rock for promoters etc. LIC plus Malvinder Singh’s stake is more than 50%. Therefore if you do not get their stake you are never going to get majority control over the company. So would Pfizer be happy? Assuming that LIC does not sell and Malvinder Singh does not go back on his Daiichi contract and sells, which seems unlikely, with a minority stake if however high the price and assuming that everybody else tenders.

So it is a sticky and thorny situation right now. The one small wild card that you need to keep in mind is that there could be vested interest right now in putting out this kind of news so that the market price of Ranbaxy inches up. To consummate the deal in an open transaction on the screen, the Ranbaxy stock needs to move higher because of the price closer to that price.

There are lots of things, which happened in the market as you have figured out over the last many years. There are vested interests and people say lots of things, which are not always true. I think you would keep your mind alert to that possibility that at Rs 540 with a deal at Rs 737, it is a difficult transaction to transact on the screen. So it would be a very helpful if Ranbaxy were to make that journey closer to that Rs 700 mark, which does not seem to be happening under ordinary circumstances.

I am not saying, that is a conspiracy theory. But I am saying strange things happen in the market. It is very hostile first and Pfizer apparently had talks with Ranbaxy. So now to come back and say I will pay top dollar. For the sentiment perspective it would be good because if the market gets a whiff of for wrangling match between Pfizer and Daiichi, which takes Ranbaxy open offer price higher then that potentially could be positive. But the way the stakes are loaded, it seems quite unlikely that such a hostile situation might be pulled off, particularly for an Indian company.

But we are learning new things everyday, so cannot close your mind to any possibility. Just that this seems quite difficult to pull off given the two large blocks, which are lying with LIC and Ranbaxy or Daiichi.