Petitioners had alleged insider trading in Ranbaxy shares before the deal was announced on April 6...!!!
The Andhra Pradesh High Court has ordered an interimstatus quo on the $4-billion deal between Sun Pharma andRanbaxy Laboratories. The order, issued on Friday, was in response to a petition filed by some individual investors, who alleged insider trading in Ranbaxy shares before announcement of the deal on April 6.
Judge P Naveen Rao said: “There shall be interim status quo as prayed for.” In their petition, Tammali Shiva Kumar and Undi Venkatasubbajaru, said to be investors in the two drug firms, requested the court to direct the Securities and Exchange Board of India (Sebi) not to give its in-principle approval to the merger or an arrangement or an amalgamation of Sun Pharma and Ranbaxy. They sought that Sebi, BSE and the National Stock Exchange (NSE) be directed to probe insider trading in Ranbaxy shares and take appropriate action under the law.
The petitioners also sought action against Sun Pharma and its wholly-owned arm Silverstreet Developers LLP. According to them, high-volume transactions in shares and increase in the stock price three days before announcement of the proposed merger imply there was extensive trading by people with prior knowledge of the proposed deal. They said Silverstreet and Sun Pharma, actively involved in the merger negotiations, were in possession of price-sensitive information.
Silverstreet had in the March quarter bought nearly six million shares of Ranbaxy. Denying there was any insider trading, Sun Pharma had earlier said in a statement that its subsidiary’s share purchase was being annulled as part of the merger deal.
The court has issued notices to Sebi, BSE, NSE, and the three companies (Sun Pharma, Silverstreet and Ranbaxy) to respond to the petitioners’ charges.
On the court order, Sun Pharma has said: “We have not received any such communication. At Sun Pharma, we hold ourselves to the highest standards of corporate governance and business ethics. Our code of conduct serves as a compass that guides the actions of our employees and directors, ensuring consistent and uncompromising integrity as we build trusted relationships around the world. The matter related to purchase of Ranbaxy shares does not violate insider-trading rules. With regard to the petition filed, the matter is sub judice, so we cannot make specific comments, but we would be taking appropriate action as advised by our legal counsel.”
Meanwhile, a separate set of investors has filed another petition seeking that the court direct Sebi to probe the insider-trading angle, as sought by the earlier petitioners. The matter is expected to come up for hearing on May 5.
Source: http://www.business-standard.com/article/companies/sun-pharma-ranbaxy-deal-court-orders-interim-status-quo-on-merger-114042901402_1.html
