Is Orchid a financial or strategic investment by Ranbaxy?

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Is Orchid a financial or strategic investment by Ranbaxy?

Markets are rife with rumours of a possible open offer by Solrex Pharma in Orchid Chemicals. Why this would seem to be a plausible explanation is that the Orchid promoters hold only 17% of the equity of the company, after selling nearly 7% stake in the company lately due to margin call pressure.

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CNBC-TV18's research analyst, Varinder Bansal - A string of bad news and then in the spotlight for a deal with Pharma Heavyweight Ranbaxy . That has been the story of Orchid Chemicals over the past one month. When news hit the markets that the promoters were facing significant margin pressure calls a month ago, the stock was trashed by the markets, falling nearly 40% in a single day. Then came the big news of a Ranbaxy Promoter help group, Solrex Pharma, looking to consolidate its position in Orchid. Solrex has in the past fortnight acquired 14.7% stake in Orchid Chemicals through open market transactions.

The accumalation for Solrex started when the stock of Orchid Chemicals ranged between Rs 160 & Rs 246. While it is evident that the possibility of bigger corporate action may keep the stock in the limelight for a few more trading sessions, the one grey area that remains is whether this is a financial investment or strategic investment by Ranbaxy.

And this interest in the markets may not be unfounded. Markets are rife with rumours of a possible open offer by Solrex Pharma in Orchid Chemicals.  Why this would seem to be a plausible explanation is that the Orchid promoters hold only 17% of the equity of the company, after selling nearly 7% stake in the company lately due to margin call pressure. Also, Institutions, who hold 35% stake in the company and 50 lakh warrants remains the trump card for Orchid Chemicals. Whatever the speculation, one thing is for certain, Orchid has swallowed the right pill to grab attention to itself this time around.