Ranbaxy unit sold Orchid stock before Hospira news

Ranbaxy Laboratories sold as many as five lakh shares of Orchid Chemicals & Pharmaceuticals through a bulk deal on Tuesday, well before the latter announced the sale of its generic injectables business to US firm Hospira for Rs1,900 crore.

Rexcel Pharma, a front company of Ranbaxy subsidiary Solrex, offloaded the shares on the National Stock Exchange at Rs221.96 each.

Did Ranbaxy have a whiff of the deal?

The company is said to have sold more shares through the open market on Wednesday, too, though no other bulk deal was reported.

“They are definitely selling. The high volume in Orchid Chemicals today (Wednesday) is because of sale of a large number shares by Ranbaxy,” said a dealer, not wanting to be identified.

There were several large deals of over 50,000 shares in Orchid Chemicals also early on Wednesday between Rs224.90 and Rs 231.30.

“Of course Ranbaxy is selling Orchid shares. Otherwise the volumes would not have been so high. It makes sense for them too because Ranbaxy doesn’t have any strategic incentive left to hold on to the stake,” said Ranjit Kapadia, vice-president, institutional research at HDFC Securities.

A spokesperson for the Delhi-based Ranbaxy refused to either confirm or deny the share sale, but said: “We have reiterated several times that it (Orchid) is a financial investment for us. We have nothing more to say.”

Orchid shares closed at Rs199.15 on the NSE, down 10%, with volume at 24.45 million shares —- more than ten times the normal.

The combined volume on BSE and NSE was around 33.98 million shares.
Shares of Ranbaxy closed at Rs 526.75, up 2.10%, on the NSEss.

According to a regulatory filing by Orchid Chemicals, Ranbaxy held 9.67 million shares, or 13.73% stake, of the company at September-end. Promoters’ held 21.2%.
Some analysts see the exit as positive for Ranbaxy. “It is good for Ranbaxy. They will get some cash, even though the profit on stake sale may not be substantial. Maybe they (Ranbaxy) have some other plans now,” said Tushar Manudhane of Prabhudas Lilladher.

Ranbaxy had bought Orchid shares in April 2008 in a wide price band of Rs 160-240 a share.
(With NW18)