Glenmark Pharma stock falls on stake sale in Glenmark Life Sciences
Glenmark Pharmaceuticals share price fell 2 percent at open on September 22, after the pharma company agreed to divest 75 percent of its stake in subsidiary Glenmark Life Sciences to Nirma.
Glenmark Pharma will own 7.84 percent in Glenmark Life Sciences, down from the current 82.9 percent, after the sale. Nirma will have to make a mandatory open offer to public shareholders of Glenmark Lifesciences for an additional 17.15 percent stake at Rs 631 a share.
Analysts expect Glenmark to benefit from the stake sale, as it will transition from a net debt position to a cash surplus position. This is expected to have a positive impact on the company’s return ratios over the next two to three years.
Glenmark Pharma’s management has said that they aim to be net cash positive for the next two years after the total debt gets extinguished after the deal. Going forward, they will focus on growth, ROCE, and being cash positive.
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