Ipca Labs buys over 26% stake in Lyka Labs, makes open offer

 Ipca Labs buys over 26% stake in Lyka Labs, makes open offer

Ipca Laboratories Ltd is buying a fourth of Lyka Labs Ltd and making an open offer to buy another 26% in the drugmaker whose shares have jumped more than seven times over the past year.

Mumbai-based Ipca Labs said Wednesday it bought a 9.84% stake in Lyka via bulk deals on Monday and Tuesday, and has agreed to purchase another 16.73% from some individual shareholders. Overall, it is spending almost Rs 97.89 crore ($13 million) for the 26.57% stake.

In addition, it has made an open offer to Lyka’s public shareholders to buy up to 26% more at Rs 130.50 per share. Shares of Lyka jumped by their maximum limit of 5% to Rs 135.60 apiece on Wednesday. The shares have jumped more than seven times over the past year.

If the open offer is fully successful, Ipca will have to shell out Rs 97.34 crore.

Ipca also said that it has entered into a Joint Management Control agreement with Lyka’s promoters.

Lyka was set up in 1976 and makes injectables, lyophilized injectables and topical formulations at a factory in Gujarat. It clocked a profit after tax of Rs 49.46 crore on total income of Rs 109.87 crore for the six months ended September 30. It had reported a net loss in the previous two fiscal years.

Ipca doesn’t have any business directly from lyophilized injectables, and the acquisition of Lyka will enable it to enter this segment. In turn, Lyka will benefit from Ipca’s marketing expertise in the branded generic formulations business in Africa, Latin America, Southeast Asia and the Middle East where it is currently not doing business.

Ipca shares were trading 1.5% down on early Wednesday morning at Rs 2,025.95 apiece. The mid-cap company’s shares have lost a fourth of their value since touching a one-year high in the middle of September.

Sumit Upadhyaya

The Capital Quest