Abbott and Solvay set swap ratio for Indian merger
This article was originally published in Scrip
Abbott India gained sharply on Indian bourses after the company announced plans to amalgamate the operations of Solvay Pharma India with itself.
Shares of Abbott India rose by 3.3% to touch Rs1,472.75 ($32.40) on 24 November after the company said that its board had unanimously approved the draft scheme for the amalgamation with Solvay. A swap ratio of 2:3 (ie, holders of every two shares of Solvay Pharma India will be entitled to three shares of Abbott India) had been set, both companies informed the Bombay Stock Exchange.
Solvay India's shares fell sharply however, to close at Rs2,351.25 on 24 November, down by 11.5%. Some analysts say that a voluntary delisting of Solvay would have offered larger potential gains for the company's shareholders rather than a merger with the current swap ratio.
Abbott had earlier launched an open offer to acquire an additional 20% in Solvay Pharma India following its $6.6 billion global buy of Solvay's pharmaceuticals unit in September 2009. Through this it had indirectly acquired 68.85% of the equity share capital of Solvay India. Internationally, Abbott closed its acquisition of Solvay's pharmaceuticals unit earlier this year (scripintelligence.com, 16 February 2010).
The companies said that the swap ratio for the Indian merger was recommended by Ernst & Young and Pricewaterhouse Coopers, while UBS Securities India and DSP Merrill Lynch provided fairness opinions on the valuation of assets/shares to the boards of Solvay Pharma India and Abbott India respectively.
Solvay Pharma India was formed in April 2000 as Duphar Pharma India, as a result of the demerger of Duphar-Interfran’s pharma business. It was subsequently renamed Solvay Pharma India in 2002 and has a presence in segments such as women’s health, gastroenterology, mental health and influenza vaccines.
Abbott, which earlier this year acquired Indian firm Piramal Healthcare's domestic formulations business (scripintelligence.com, 21 May 2010), currently holds the top position in India with a combined market share of about 7% (inclusive of the Solvay and Piramal deals).