Shares of Strides Arcolab Ltd have come under selling pressure after the company announcement that it has completed the sale of its Agila Specialties Division to Mylan Inc for a total consideration of up to $1.75 billion.
The stock, which moved up to a high of Rs 1,045 on the NSE in the early minutes of trading today, has now fallen to Rs 891.20, a loss of about 9.50 per cent apparently because of certain provisions of the sale agreement and possibly due to profit-booking.
In its filings with the stock exchanges, the company said the terms of the deal included a holdback of $250 million contingent upon satisfaction of certain regulatory conditions.
This followed the warning letter received by it for one of its units in Bangalore. It had agreed to a holdback $250 million that was “contingent upon satisfaction of certain regulatory conditions’’ related to the injectable facilities in India and said it expected them to be satisfied sometime in 2014.
The company said that it anticipates an additional expenditure of $150 million including cost of acquisition of additional assets from its erstwhile partners and an estimated remediation cost relating to its regulatory commitments subsequent to the warning letter.
Arun Kumar, Founder & Group CEO, expected Agila to have a significant role in “Mylan’s growth strategy to become a global injectable leader’’ and said the acquisition would “augur well for all the 1,800 plus employees of Strides Group’’ who would become part of the Mylan group.
The stock opened at Rs 1,041.10 on the NSE and moved up to Rs 1,045 before it started decelerating. It has fallen by Rs 93.50 or 9.50 per cent to Rs 891.20 with a trading volume of 8.46 lakh shares. It has touched a low of Rs 845 before pulling back. The board of directors will on December 10 consider declaration of special dividend.