Biocon is set to draw investor attention on Monday after the biotechnology major approved a plan to convert Biocon Biologics into a wholly-owned subsidiary, triggering a major equity reshuffle and fresh fundraising.
The board has cleared the issuance of 17.1 crore new shares to Biocon Biologics’ minority shareholders at Rs 405.6 per share, a 3.3 per cent premium to Biocon’s closing price on Friday. The allotment is valued at Rs 6,591 crore. Alongside this, Biocon will require an additional USD 400 million (Rs 3,598 crore) to settle payments owed to Mylan, which holds a 6.09 per cent stake in the biologics arm.
To support the transaction, Biocon will raise Rs 4,500 crore through a Qualified Institutional Placement. The company said the deal pegs Biocon Biologics’ valuation at USD 5.5 billion, and will reduce promoter shareholding in Biocon to below 50 per cent.
Brokerage views were cautiously balanced. BofA Securities said the move streamlines Biocon’s group structure and opens room for debt reduction, although it highlighted potential equity dilution from the upcoming QIP and the end of the lock-in period for minority investors in Biocon Biologics.
Goldman Sachs maintained a “neutral” stance on the stock, with a Rs 375 price target. |
