Ranbaxy is close to finalize a plan to declare an open offer for Chennai-based Orchid Chemicals.

Ranbaxy-promoter company Solrex was reported to have raised its holding stake in Orchid to 14.72% till Friday last week, which is slightly below the 15% limit needed to make an open offer for an extra 20% stake in the company.

When contacted Ranbaxy chief executive officer and managing director, Malvinder Singh refused to comment.

Last week after news erupted that Solrex had bought more than 11% stake, Ranbaxy stated that it did not trust in unreceptive bids.

Ranbaxy will strengthen its shareholding further in Orchid, as the move goes well with its plan to develop via making investments in small and medium-sized companies.

Ranbaxy has already taken strategic stakes in three companies Zenotech, Krebs and Jupiter over the last one year.

Last week, Mr. Singh told, “Our strategy is to grow organically, create partnerships as well as compete with our partners to take the company to the next level by creating better value. Put together, two companies (partners) will work better, faster and be in a position of strength, than on an individual level.”

However, he had declined to make any statement on Orchid or Solrex, but added, “We have an aggressive and ambitious vision where there is a strategic advantage.”

It is also heard that the discussions between the two companies did not figure out, after which Ranbaxy seems to have decided to proceed with its open offer plans.

But, an Orchid spokesperson stated that the promoters were viewing a variety of alternatives in order to lift their stake in the company.

Moreover, Morgan Stanley purchased 4.20 lakh shares (or 1.14 per cent) of Orchid on Tuesday (April 15) at a price of Rs 269.99 a share on the National Stock Exchange and 3.30 lakh shares on the BSE.

According to shareholding data available, Morgan Stanley previously held less than one per cent in the Chennai pharma company.
 
Orchid’s Chairman and Managing Director K Raghavendra Rao holds just 15.9% stake in The company (Orchid).
 
Life Insurance Corporation of India and United India Insurance Company hold 7.8 per cent and 2.48 per cent respectively. Other large institutional investors in the company are Gazal Industrial Holdings (8.48 per cent), Macquarie Bank (5.13 per cent), Harpline (4.54 per cent) and Fidelity Trustee Company (2.66 per cent).
 
Solrex Pharmaceuticals was reported to have increased its stake in Orchid to 14.72 per cent till Friday last week, edging to the 15 per cent mark that could trigger an open offer.
 
However, neither the stock exchanges nor the company have confirmed this as yet.
 
According to data on the NSE, Solrex has a 12.84 per cent stake in Orchid, all acquired in separate deals after March this year.
 
An Orchid spokesperson declined to comment on the developments.