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What is the story about?
Shares of Biocon Ltd. will be in focus on Monday, December 8, after its board announced over the weekend that it will be turning its subsidiary Biocon Biologics into a 100% subsidiary.
The company announced that it will be issuing shares to shareholders of Biocon Biologics at a price of ₹405.6 per share, which is a 3.3% premium to Biocon's closing price last Friday.
The move will result in a total equity dilution of 17.1 crore shares, worth ₹6,591 crore. The company will also need an additional $400 million or ₹3,598 crore to pay to Mylan, which has a 6.09% stake.
As part of this announcement, the company's board has also approved raising funds to the tune of ₹4,500 crore through a Qualified Institutional Placement.
This deal will value Biocon Biologics at $5.5 billion as per the company.
Post this deal, promoter holding in Biocon will fall below the 50% mark.
Brokerage firm BofA Securities said that the deal will lead to a simplified corporate structure, and gives an option for debt reduction to Biocon.
It added that although the deal is "net neutral" for Biocon, they will watch for the resultant dilution from the proposed QIP for cash payment to Viatris and the end of the lock-in period for minority shareholders to Biocon Biologics.
Goldman Sachs remains "neutral" on Biocon with a price target of ₹375.
Out of the 18 analysts that have coverage on Biocon, 11 of them have a "buy" rating on the stock, two say "hold", while five of them have a "sell" rating on the stock.
Shares of Biocon ended 1% higher last Friday at ₹392.05. The stock is up 3% in the last one month, and has gained 6.3% in the year so far.
The company announced that it will be issuing shares to shareholders of Biocon Biologics at a price of ₹405.6 per share, which is a 3.3% premium to Biocon's closing price last Friday.
The move will result in a total equity dilution of 17.1 crore shares, worth ₹6,591 crore. The company will also need an additional $400 million or ₹3,598 crore to pay to Mylan, which has a 6.09% stake.
As part of this announcement, the company's board has also approved raising funds to the tune of ₹4,500 crore through a Qualified Institutional Placement.
This deal will value Biocon Biologics at $5.5 billion as per the company.
Post this deal, promoter holding in Biocon will fall below the 50% mark.
Brokerage firm BofA Securities said that the deal will lead to a simplified corporate structure, and gives an option for debt reduction to Biocon.
It added that although the deal is "net neutral" for Biocon, they will watch for the resultant dilution from the proposed QIP for cash payment to Viatris and the end of the lock-in period for minority shareholders to Biocon Biologics.
Goldman Sachs remains "neutral" on Biocon with a price target of ₹375.
Out of the 18 analysts that have coverage on Biocon, 11 of them have a "buy" rating on the stock, two say "hold", while five of them have a "sell" rating on the stock.
Shares of Biocon ended 1% higher last Friday at ₹392.05. The stock is up 3% in the last one month, and has gained 6.3% in the year so far.
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