The AstraZeneca Pharma India scrip was locked at the upper circuit of 20% on Monday, touching its 52-week high of Rs 1,110.90, after the drugmaker said its majority stakeholder has proposed a voluntary delisting offer.
The company said while the Sweden-based promoter?s board of directors approved the proposal on March 1, the Bangalore-based company?s board plans to convene on Wednesday to discuss the matter. Currently, AstraZeneca Pharmaceuticals AB holds 75% stake in its Indian subsidiary. Meanwhile, the parent company has cut the financial grant to AstraZeneca Pharma India to $14 million from $22.5 million announced earlier as the subsidiary?s financial performance has been in line with its expectations.
On the delisting plans, experts say the promoters want to retain their profits instead of diluting it among their public shareholders. ?The promoter entity is looking to delist from the exchanges with the intention of keeping the major chunk of earnings with itself,? said an analyst. The Indian subsidiary reported net profit of R1.51 crore for quarter ended December after registering a loss of R1.23 crore in the three months ended September 2013.
This is, however, not the first time the company has proposed to exit from the Indian exchanges. The company, which established operations in India in 1979, had approved a plan to delist shares in June 2010. However, the plan fell through as votes cast by the public shareholders in favour of the delisting resolution were less than two times the number of votes cast by the public shareholders against it, according to a BSE notice dated September 28, 2010.
Separately on March 1, the company said it entered into a subvention agreement with AstraZeneca Pharmaceuticals AB under which the Swedish promoter will pay a voluntary non-repayable financial grant of about $22.5 million to $26.5 million over the duration of FY14 to FY16 to assist the Indian arm in its efforts to establish and expand its presence in the Indian markets.
