Financial Daily from THE HINDU group of publications
Sunday, Jul 24, 2005
Corporate - Mergers & Acquisitions
Matrix, Strides call off merger plan `No agreement on valuation'
Hyderabad , July 23
MATRIX Laboratories Ltd and Strides Arcolab Ltd have decided to call off their proposed merger, following the failure to reach an agreement on valuation.
This rare development in the Indian corporate mergers arena comes after the boards of directors of the two companies, at their respective meetings on June 1, approved the merger in principle.
The proposed merged entity - Matrix Strides Ltd - was aimed at synergising each other's strengths and becoming a major player in the global pharmaceutical industry.
It was expected to become the country's seventh largest drug manufacturer.
The decision to call off the proposed merger was announced by the Matrix Executive Chairman, Mr N. Prasad, and the Strides Group CEO and Managing Director, Mr Arun Kumar, in a joint statement issued here on Saturday.
"The intention of merger was based on a strong business strategy and the potential benefits of integration. While it is unfortunate that the agreement could not be reached on valuation, the managements of the two companies recognise and will harness the strategic relationship envisaged in the rationale of the merger," they said.
"The managements of both the companies respect each other's businesses and will continue to grow them independently while combining the strengths for mutual benefits."
Mr Prasad told Business Line that, as per the in-principle agreement, the merger was subject to due-diligence and valuation.
"As we could not reach the agreement on valuation, we had to call off the merger. Though the financial collaboration could not materialise, we will, however, continue to pursue the business collaboration."
According to him, in line with such mutually beneficial business objectives, Strides would license a range of injectable products to Docpharma, a company recently acquired by Matrix, for the Benelux (Belgium, Netherlands and Luxemburg) markets.
Matrix would also strengthen co-operation agreements with Strides in anti-retroviral business by enhancing the scope of the current understanding, Mr Prasad said.
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