Usually yes,
But in this case, as 3 yrs since listing has not passed, they cant apply for de-listing.
Most likely, any deal between Glenmark and the suitor will be subject to maintaining the maximum promoter share-holding at 75%.
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Now reports say there are three bidders. I hope Glenmark Pharma makes a decision soon and curb speculations in the market
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Why GLS share price fell sharply today? The volumes were significant.
Most likely a reaction to an article that appeared in a business news site a couple of days back that Nirma is the sole bidder after the second round of bidding and that it’s bid value is below the market cap of GLS. Link of the news article given below
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As per the media interaction of Glenmark’s management, they are looking to sell only 7-8% in GLS as of now. I know there are media reports doing the rounds since last 2-3 months about the parent putting their entire stake in GLS on block, however that may not be the case as of today. Also, the CFO clearly mentioned that the stake sell will not happen in next 1 quarter so we will have to wait probably till 2024 to get a clear picture. This is one of the overhang for GLS. Leaving that aside, I think the company is doing well and we should not give much importance to the day to day movement of the stock unless there is substantial information available.
Disc: Invested
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The ambiguity may get cleared tonight
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Glenmark Pharma to sell 75% stake to Nirma @615 per share
Glenmark Pharma will retain the remaining ~7%
Nirma to make open offer
Is there any price calculation to be used for open offer (as per SEBI rules) to protect minority interest?
[EDIT: Open offer price at Rs. 631 for 17 odd percentage, basically all the current public shareholders as GLP holds roughly 83% now of which 75% is being acquired by Nirma]
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Here is the latest filing on the BSE
And here is the open offer document
So Nirma has offered the price of 632 to buy from remaining public shareholders
Opinions are welcome from all the members
dr.vikas
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It would be really great if Nirma management arranges an investor meeting and explain their plans for GLS. Without knowing their plans for the company, it’s impossible to know what lies ahead.
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Any idea will Nirma group delist the company after completion of open offer. Should we tender/sell our shares or hold on as of now.
If not selling now will I get chance to sell it later or not.
I have not faced such kind of situation till now.
Disc-holding 15% of pf from lower levels.
In the open offer document, as of now it is mentioned on Page 3/4 that ‘the acquirer does not have the intention to delist the company after the open offer’
Need more clarity here on what could be the way forward for sure.
Discl : Invested
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No delisting on cards as mentioned in the open offer. “The acquirer does not have an intention to delist the Target Company pursuant to this Open Offer.”
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The new promoter, NIRMA, had treated minority shareholders badly in past according to some articles I came across. Although they have made it clear this time that they have no intention of delisting right now but intentions can change anytime. Hope they don’t do that thing again in future in case of GLS.
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The company misguided the markets. Plans change all the time…that is true. But plans to sell 7-8% and actually selling 80% is way off. Glenmark promoter surely thinks we will open a new API subsidiary and hence is selling this one at market price. There are too many unknown unknowns now…I have invested here. I will probably sell half quantity.
The significant terms of the share purchase agreement as per by the GLS disclosure gives one some insight into the eventual delisting quandry in the minds of minority shareholders and the domestic business support from GPL:
-
Restrictive clause on GPL to sell the equity shares retained by it (7.84%) upon the completion of the Transaction until the earlier of:
(i) one year from the closing under the Share Purchase Agreement and
(ii) one month from the date of compliance with minimum public shareholding requirements by the Company and the Buyer (such period, the “Non-Disposal Period”). -
Prior to the closing of the Transaction, the board of directors of the Company may consider, approve and declare an interim dividend of INR 22.50 per equity share. In such event, the sale consideration will stand adjusted in the manner specified in the Share Purchase Agreement. This will adjust the buyback price as well.
-
In connection with the Transaction, certain ancillary arrangements among the Company, GPL and certain subsidiaries of GPL have been agreed, for the provision of support services for a specified period to facilitate the transition of ownership of the Company from GPL to the Buyer. Such agreements include:
(i) an amended and restated API supply and purchase agreement dated September 21, 2023, pursuant to which GPL has agreed to procure active pharmaceutical ingredients from the Company for a period of five financial years with effect from April 1, 2024; and
(ii) a services amendment agreement dated September 21, 2023, pursuant to which GPL and certain subsidiaries of GPL will provide support services for a specified period, including with respect to business development arrangements in overseas jurisdictions.
I am drawing certain inferences from the above terms:
- GLS will continue to get significant business from GPL for 5 years.
- Prospect of a substantial interim dividend in the near term.
- GLS will remain a public listed entity for 1 year atleast from the close of the share purchase transaction. And GPL wont/cant tender their residual shares in the mandatory open offer. The other restrictive clause on GPL selling their shares is lifted only after Nirma has been able to comply with minimum public shareholding norms.
Also, if Nirma has secured debt to buyout GPL shares and this transaction cant be funded by domestic banks, then the lender may need Nirma to keep GLS public listed (from valuation perspective comfort of the lender).
The GPL management surprised me with their about turn from the concall reply on selling only to comply with minimum public shareholding to full stake sale but perhaps it was for the best for minority shareholders as the market never gave it a premium earnings multiple from the date of listing anf things only started looking up for this stock when the rumor of stake sale became public post March of 2023.
Disclosure: significant allocation and in significant confusion, but happy that downside to present market cap is limited due to the incumbent open offer!
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Besides the technicalities of Stake sale, Open Offer, Special dividend etc … I would like to point out a few more observations -
(a) Glenmark Life was paying hefty dividends in the past as well. IMO - this was being done as its parent was debt ridden. Now on, the money can be ploughed back to improve the growth rates of Glenmark Life - specially to meet the requirements of its CDMO business
(b) For CDMO business to do well, the innovators have to have complete trust in their partner. Glenmark Life’s parent ( GPL ) was involved in developing its own NCE. This was a big obstacle which in my opinion always prevented Glenmark Life to be a serious CDMO player. Now this overhang should be over
These two things make me bullish about the deal, besides the open offer
Disc: biased, invested. Not SEBI registered
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Since last 6 months, there were news in market that they may sell a controlling stake so there was never a confusion on that. Also, the stock performance had more to do with their good results of last quarters then any rumors about stake sell by parent. Also, see the commentary of last two quarters by management where they clearly outlined the growth path for next 2-3 years along with the capex. Along with that, the stock was trading really cheap with a great dividend yield that also helped.
Agree with what @ranvir mentioned about dividends and CDMO plans. In fact this is exactly what Sajal Kapoor mentioned in one of the twitter spaces around April.
Q2 results will be announced in a month and it will be interesting to see what is management’s road map going forward. GLS is doing good as an independent entity. I am only worried about Nirma’s plan for the company going forward. So far there is no presentation/concall by Nirma, only a statement. I would love to hear more from the new management.
Disc: Invested
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Hi Suhag, around 16 August in this timeline If you scroll up, you yourself shared earlier that the mgmt of GPL said in interview about selling 7-8 percent…therefore there was definitely some confusion, won’t you agree now or maybe delete your earlier post since post facto you were aware that they were selling controlling stake?