DRL to buyback Rs 1,570 crore shares
The company said that the indicative maximum number of equity shares bought back would be 44,84,049.
Hyderabad: Dr Reddy’s Laboratories, the second largest drug maker in India by sales, on Wednesday offered to buyback around 44.85 lakh shares for up to Rs 1,569.4 crore. These shares account for 2.6 per cent of the existing paid up capital of the company.
Explaining the rationale behind the buyback offer, the company said: “The buyback is proposed on the account of the company’s strong cash flow position and is expected to be EPS accretive contributing to an overall enhancement of value for shareholders going forward.”
The company’s board has approved a proposal to buyback shares for an amount not exceeding Rs 1,569.4 crore at a price not more than Rs 3,500 per share under the open market route.
The maximum buyback price represents 18.6 per cent premium, compared to the average of the weekly high and low of the closing price of the company during the last two weeks, it said.
The company said that the indicative maximum number of equity shares bought back would be 44,84,049 and the minimum buyback size would be 22,42,024 shares.
The buyback is subject to the approval of the shareholders of the company by way of a special resolution through postal ballot and other regulatory approvals.
The decision comes at a time bears are ruling the equity markets and the company is facing regulatory problems with the US FDA.
Both these factors pulled down the company’s stock to Rs 2,750 on January 21, 2016 — a price that was last recorded nearly 18 months ago — eroding 37 per cent of the 52-week high seen on October 20, 2015.