Zenotech Labs

Zenotech Laboratories

(BSE:532039)

CMP: 29.75

This small company with a market cap of under 100 crores is looking like a "NOTHING" till today, It has losses it has debt and it has closed its manufacturing unit.But the point here is: This company is owned by Ranbaxy Laboratories and Daichii Sankyo.Ranbaxy holds 46.84%, Daiichi Sankyo holds 20% that is 66.84% promoter holding. Its ex-promoters (Chigurupati family) from whom Daiichi had acquired the shares is still holding more than 20% stake. Which means a total of 86.84% is with ex and present promoters.Now with the Sun Pharma - Ranbaxy deal, Sun Pharma becomes the owner of this small company and it also made a mandatory open offer last year to acquire Daiichi Sankyo's 20% in Zenotech at Rs 18 per share but now the open offer price will be needed to change according to SEBI regulations.Chigurupati did not want to sell his shares under 160 rs per share and yet Daiichi managed to acquire the company but till date the case is going on.

I think it is mandatory for Sun Pharma to make the open offer and acquire the company fully. Via Ranbaxy, Sun Pharma already owns 46.84% and by buying additional it will further increase Sun Pharma's holding in Zenotech.

Now what about the future? Either, Sun Pharma can buy Chigurupati's stake too and delist the company or else Sun Pharma may start the operations for this company, In any case Chigurupati will not be easy to deal with as his earlier case against Daiichi is still stretched up.Sun Pharma is on a acquisition drive, Last week it has purchased opiates manufacturing unit of Glaxo in Australia.

I think Sun Pharma will takeover Zenotech and starts its operation too but this is a pure assumption, Company is not in good health.

I think this can be the next "KREBS BIO" which is another shut down company being taken over by IPCA Laboratories which has moved the share price from 30s in Feb 2015 to almost 100 today.Disclaimer: I may have vested interest in this stock.

Note: This is not a recommendation, Exercise caution.

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(Earnings Before Interest, Taxes, Depreciation, and Amortization)