Pfizer Follows Novartis; Offers To Up Stake In Indian Arm To 75 Percent
This article was originally published in The Pink Sheet Daily
Executive Summary
Pharma plans further launches of its patented products in emerging market.
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MUMBAI - After Novartis and Mylan, it's now Pfizer's turn to increase its equity holding in its Indian operations. In an announcement to the Bombay Stock Exchange, Pfizer said it has decided to acquire an additional stake of 33.77 percent in Pfizer India through an open offer from public shareholders at a price of 675 rupees per share ($13.23). Pfizer Investments Netherlands B.V., a wholly owned subsidiary of Pfizer, will acquire shares through this open offer. "Successful completion of this offer, assuming full acceptance, would raise the indirect stake of Pfizer Inc in Pfizer Ltd to 75 percent from the current level of 41.23 percent. The offer will represent a total value of up to 6.8 billion rupees or approximately $136 million," the company said. The offer for the shares, which are traded on the Bombay Stock Exchange and the National Stock Exchange of India, is expected to open in June 2009. The open offer will be managed by HSBC Securities and Capital Markets (India) Private Ltd. According to a senior company official who requested not to be quoted, the price offered for the additional stake is based on the rules framed by the Indian capital markets and should be acceptable to the shareholders. On whether the increased equity holding by the parent company will reflect on the company's operations immediately, the official said, "In due course, things will become clear. It's not the right time to speak." Pfizer is in the middle of integrating its operations with fellow American drug maker Wyeth, a company it acquired in a global deal valued at $68 billion (1 (Also see "As Pfizer-Wyeth Combine Eye Vaccines Business, Novartis, GSK, Sanofi-Aventis And Indian Companies Brace For The Challenge" - Scrip, 1 Feb, 2009.)). The tender offer in India will be made at a premium of 8.6 percent to the closing share price of 621.55 rupees of Pfizer on April 9 on the National Stock Exchange. It also will represent a premium of 22.2 percent over Pfizer's average share price during the 30 days ending April 9 on the National Stock Exchange. A senior analyst from a foreign brokerage said, "Companies like Novartis and Pfizer are having plans to launch their patented products. It will be expected of them to maximize profits from these products and plow back to the parent's kitty than distribute among shareholders here. At a low trading price, the shares look attractive." Earlier, Swiss-headquartered Novartis offered to hike its equity stake in its Indian operations up to 90 percent 2 (Also see "Novartis Wants Tighter Grip Over Its Indian Ops; Announces Open Offer To Up Stake To 90%" - Scrip, 25 Mar, 2009.). Vikas Sonawale of Religare Capital Markets countered that Pfizer's offer price may not be very attractive since the shares had been trading at a low price-equity multiple for the last few months. Sonawale said, "Given that multinational companies do not have any significant relevance to keep their shares listed in India in terms of raising funds or such activities, Pfizer's move is strategically important. While product launches will happen at a brisk pace in India, no company will want to get into conflicts like transfer pricing between the Indian entity and the parent entity." Pfizer launched Champix (varinicline) in India and plans to tie-up with several private hospitals for its promotion 3 (Also see "Pfizer Pushes Champix In India Through Private Hospitals And Clinics As Smoking Epidemic Hits India" - Scrip, 15 Mar, 2009.). In the last few years, Pfizer has launched patented products like Viagra (sildenafil), Caduet (amlodipine-atorvastatin) and Lyrica (pregabalin) in India. - Vikas Dandekar ([email protected]) [Editor's note: This article appears courtesy of 4 PharmAsiaNews.com, F-D-C Reports' new site for Asian biotech and pharmaceutical news. 5 Register for a 30-day risk free trial.] |