Sensex Falls;Abbott, Piramal in $2.2 B Deal

Mayank Mehta, Chandrasekhar Atreya and Darlington Musarurwa
21 May, 2010
New York City

Stocks in Mumbai trade lower as global markets trade near their six-month lows. Rupee trades crosses 47 to a dollar. Piramal Healthcare retracts from record high after selling generic business to Abbott Labs for $2.2 billion and earn-out of as much as $1.6 billion in the next four years.

[R]6:00 PM Mumbai, 8:30 AM New York – Stocks in Mumbai trade lower as global markets trade near their six-month lows. Rupee trades crosses 47 to a dollar. Piramal Healthcare retracts from record high after selling generic business to Abbott Labs for $2.2 billion and earn-out of as much as $1.6 billion in the next four years.[/R]

The Sensex index fell 0.5% as investors withdrew funds as rising unemployment claims in the US and Europe’s sovereign debt crisis damped their appetite for riskier assets.

The rupee slipped as low as 47.30 a dollar and then gained a little to be 47.19 a dollar at 10.09 a.m. in Mumbai. The 6% loss for the rupee since April 30 is the second worst performer among Asian currencies.

India’s 10-year bonds gained on optimism that government will reduce debt issuance after sales from 3G auction brought in near twice the estimated revenue.

Abbott Laboratories has agreed to buy the branded generic drug unit of Piramal Healthcare Ltd in India for $3.72 billion in an all cash deal to be paid by Illinois-based Abbott Park. The deal is expected to be completed in the second half of the year.

Abbot will pay $2.12 billion initially and $400 million per year for four years from 2011. The acquisition will be the second largest takeover in India’s healthcare sector and will build on Abbott’s presence in emerging markets.

Abbott plans to operate the Piramal unit as a standalone business.

The Sensex index in India decreased 74.07 or 0.45% to 16,445.61 and CNX Nifty index fell 25.15 or 0.15% to 4,922.45. Among the Sensex 30 stocks, 6 rose and 24 fell.

On BSE trading, 577 stocks advanced, 2,153 declined and 73 were unchanged. Metal, realty and capital goods stocks fell.

Twelve metals shares declined 1.79% to 4.28% on worries about the impact of Europe''s debt crisis on global economy recovery.

Jaypee Infratech was trading at Rs 97.85 a 4% discount to the initial public offer price of Rs 102.

Rupee edged lower 12 paisa to Rs 47.25 against one dollar.

Gainers & Losers

Bharti Airtel Limited added 2.2% to Rs 266.00 after the company added 3 million mobile users in April 2010 to reach a total of 130.6 million users.

Century Textiles and Industries Limited dropped 2.5% to Rs 442.00 after the company decided to stop production of tyre yarn in stages with effect from May 21 in view of adverse market scenario and demand recession.

Elecon Engineering Company Limited dropped 1.1% to Rs 77.45 after the company secured an order worth Rs 32.77 crore from Manikgarh Cement for supply of equipment.

Garware-Wall Ropes Limited fell 5.1% to Rs 70.40 after the company reported fourth quarter net profit slumped 32.5% to Rs 5.40 crore.

Grasim Industries Limited fell 2.9% to Rs 2,440.00 after the producer of cement and VSF said fourth quarter sales rose 17% to Rs 3,370 crore from Rs 2,886 crore a year ago. Net profit for the quarter rose 57% to Rs 603 crore compared to net profit of Rs 384 crore a year ago.

IG Petrochemicals Limited rose 2.8% to Rs 44.00 after the company reported fourth quarter net profit fell 15.4% to Rs 6.50 crore.

IRB Infrastructure Developers Ltd rose 0.7% to Rs 262.30 after the company said it was selected by National Highways Authority for its 114-kilometre road project in Karnataka.

ITC Limited rose 2.8% to Rs 270.05 after the company engaged in capital goods and hotel business said fourth quarter sales rose 28% to Rs 5,054 crore from Rs 3,927.4 crore a year ago. Net profit for the quarter rose 27% to Rs 1,028 crore compared to net profit of Rs 809 crore a year ago.

Jaiprakash Associates Limited added 1.1% to Rs 118.00 following a weak debut of the company''s infrastructure unit Jaypee Infratech today, May 21.

Jet Airways (India) Limited fell 1.7% to Rs 486.55 after the air carrier said fourth quarter sales rose 15% to Rs 2,605 crore from Rs 2,263.4 crore a year ago. Net profit for the quarter rose 10.7% to Rs 58.6 crore compared to net profit of Rs 53 crore a year ago.

Piramal Healthcare Limited plunged 11.7% to Rs 502.80 after the company entered into a pact with US based pharma major Abbott to sell its domestic formulations business.

Ranbaxy Laboratories Limited dropped 1.7% to Rs 417.60 after the company''s overseas unit secured approval from Canadian drug regulator for a generic drug.

Shree Ganesh Jewellery House dropped 2.74% to Rs 124.25 after the company acquired Kolkata-based Sumit Jewels for an undisclosed sum.

Visa Steel Limited fell 1.4% to Rs 38.05 after the minerals and metals industry said fourth quarter sales rose 50% to Rs 399 crore from Rs 266 crore a year ago. Net profit for the quarter was Rs 16.5 crore compared to net loss of Rs 110 crore a year ago.

Wockhardt Limited fell 6.4% to Rs 120.50 after the company reported consolidated net loss of Rs 565.10 crore compared to net loss of Rs 10.24 crore a year ago.