Sun Pharma- Ranbaxy deal put on hold till insider trade verdict comes out. Negative in short term for Sunpharma and Ranbaxy
The Andhra Pradesh High Court has asked stock exchanges not to approve Sun Pharmaceutical’s all-share transaction to buy Ranbaxy Laboratories until it decides on a petition alleging insider trading in the $4-bn deal. On Friday, the court admitted a writ petition by a group of investors who claimed that entities with prior knowledge of the deal illegally profited to the extent of Rs 2.85bn. In their petition, Tammali Shiva Kumar and Undi Venkatasubbajaru, said to be investors in the two drug firms, requested the court to direct the Securities and Exchange Board of India (SEBI) not to give its in-principle approval to the merger or an arrangement or an amalgamation of Sun Pharma and Ranbaxy.
They sought that SEBI, BSE and the National Stock Exchange (NSE) be directed to probe insider trading in Ranbaxy shares and take appropriate action under the law. The petitioners also sought action against Sun Pharma and its wholly-owned arm Silverstreet Developers LLP. According to them, high-volume transactions in shares and increase in the stock price three days before announcement of the proposed merger imply there was extensive trading by people with prior knowledge of the proposed deal. They said Silverstreet and Sun Pharma, actively involved in the merger negotiations, were in possession of price-sensitive information. We believe this to be short term negative for Sun Pharma and Ranbaxy.
Government readies plan to counter impact of weak monsoon rains
The agriculture ministry is making unprecedented preparations to counter impact of weak monsoon rains, which will be the top priority for the new government. Concerned that retail prices of pulses and rice have already risen 10% to 27% in past four months due to unseasonal rain and hailstorms, the agriculture ministry is working hard to make sure that food production is not badly hit by the weather as monsoon rainfall is likely to be weak this year.
U.K. GDP Growth Accelerates In Q1
The U.K. economy grew at a faster pace in the first quarter on a broad based recovery across major sectors, overcoming the impact of flooding and wet weather. GDP advanced 0.8% from the fourth quarter, when it grew 0.7%. However, the figure was below the 0.9% rise forecast by economists. GDP was estimated to be 0.6% below the peak in the first quarter of 2008. From peak to trough in 2009, the economy shrank 7.2%.
U.S. Consumer Confidence Dips Amid Less Favorable View Of Current Conditions
Reflecting a less favorable assessment of current business and labor market conditions, a modest deterioration in U.S. consumer confidence in the month of April. The consumer confidence index dipped to 82.3 in April from an upwardly revised 83.9 in March. Economists had expected the index to climb to 83.0 from the 82.3 originally reported for the previous month. While the consumer confidence index decreased compared to the previous month’s upwardly revised reading, it is still at its second best level since January of 2008.