Indian drug major Sun Pharmaceutical Industries Ltd approached the Supreme Court on Tuesday, contesting the status-quo order issued by Andhra Pradesh High Court stalling its proposed merger with Ranbaxy Laboratories Ltd.
On April 25, Andhra Pradesh High Court directed BSE and NSE not to approve the merger of Sun Pharma and Ranbaxy, while admitting a petition by retail investors alleging insider trading in the transaction. The size of transaction is around $4 billion.
The petition was filed by two retail investors—Tammali Shiva Kumar and Undi Venkatasubbaraju—according to media reports. It alleged that Silver Street, a limited-liability partnership firm owned by two subsidiaries of Sun Pharma, was involved in insider trading of Ranbaxy shares.
The shares of Ranbaxy saw an unusual increase in price and turnover during the six trading days before the announcement of the deal on April 6. The Delhi-based company’s shares had risen 24 per cent and trading volumes tripled in three sessions ahead of the announcement.
“Silver Street Developers LLP has two partners. Both are 100 per cent subsidiaries of Sun Pharma. Hence, all the benefits flowing from the investment in Ranbaxy shall accrue to Sun Pharma,” the petition said.
In response, Sun Pharma filed a petition in SC saying that the Andhra Pradesh High Court had no jurisdiction in passing as order as both Sun Pharma and Ranbaxy are based outside its territorial jurisdiction.
Further, Sun Pharma asked for a vacation of the stay on the grounds that it affects 1,39,546 shareholders of Sun Pharma and 1,82,721 shareholders of Ranbaxy.
Earlier this week, Daiichi Sankyo filed a petition in Andhra Pradesh High Court challenging its order. The company said that the court should not have entertained the petition of the retail investors as they approached the court "without exhausting any of the alternative remedies available" to them. It also added that delay in the merger would hurt the company’s interests. The alleged insider trading and scheme of merger are two independent issues and the court cannot stall the merger for alleged insider trading, the petition said.
(Edited by Joby Puthuparampil Johnson)
