Mumbai: Pharma major Ranbaxy Laboratories on Tuesday said its board has approved the hiving off of its research and development unit into Ranbaxy Life Science Research (RLSRL) with its existing shareholders having four shares proposed to receive one share in the new company.
The board of directors of the company has approved the scheme of demerger of the company’s New Drug Discovery Research (NDDR) unit into a subsidiary, following which the shareholders of Ranbaxy would receive one equity share in the newly-formed entity for every four shares held in Ranbaxy, the company informed the Bombay Stock Exchange.
All assets, liabilities, research personnel and pipeline related to the NDDR unit would be transferred to RLSRL. The new entity would be listed at the Bombay and National stock exchanges and the Global Depository Receipt’s at the Luxembourg Stock Exchange, the company said.
“The demerger of our NDDR unit into a separate entity establishes a robust structure to carry out path-breaking research at the cutting edge of modern medicine,” Ranbaxy Lab CEO and MD Malvinder Mohan Singh said.
The demerger would also enable RLSRL to create intellectual property at a faster pace while positioning it for the future, Singh added.
Ranbaxy has subscribed to preference shares worth Rs200 crore of RLSRL. Subsequent to the demerger, RLSRL’s equity capital would aggregate to Rs12.6 crore, the company said.
The appointed date for the scheme to come into effect after receipt of all the requisite approvals is 1 January, 2008, it added.
All approvals required for the scheme to come into effect are expected in the second half of 2008.
Ranbaxy and RLSRL Employees Welfare Fund Trust would hold 19.8 and 4.9% of the equity share capital of RLSRL respectively. The balance would be held by the shareholders of Ranbaxy Lab.
Last year, Ranbaxy had announced the demerger of its R&D operations to unlock the value for its shareholders. In 2006 Ranbaxy had spent about Rs400 crore on R&D operations. The company employs 1,400 people in its R&D operations.
The shares of the company closed at Rs415.40, up 4.81% on the BSE.