Beximco Pharma stocks soar on Sanofi takeover news

While investors continued to exhibit a tendency towards profit-booking, stocks of Beximco Pharmaceuticals rose 5.15 per cent to Tk 208.40 yesterday after news broke that it would buy a major stake in Sanofi Bangladesh.

The DSEX, the Dhaka Stock Exchange's (DSE) benchmark index, dropped 20 points, or 0.35 per cent, to 5,815 yesterday.

The local drug company's stock was the most sought-after of the day thanks to the firm's recent announcement that it would buy 54.6 per cent of Sanofi's Bangladesh unit in order to diversify its product base.

The remaining 45.4 per cent shares are owned by the Bangladesh government, according to a disclosure on the DSE website.

The base-price consideration for the majority stake is £35.5 million, subject to the deduction of the company's net financial debt and adjustments for short or excess over an agreed normative working capital at the closing date, it said.

The final consideration, which may be up to a maximum of £40 million, would be paid in cash on completion of the proposed transaction from a combination of Beximco Pharma's own cash resources and additional debt.

It is anticipated that the proposed transaction will be completed within the next three to nine months, it added. Beximco Pharmaceuticals also topped the turnover list yesterday with trade worth Tk 256 crore followed by Beximco, LankaBangla Finance, Robi Axiata and Summit Power.

Investors realised that the company has huge potential all on its own while the purchase of a majority stake in Sanofi will only enhance it, according to a stock broker.

"So, they are buying its stocks," he said, adding that they should remain cautious since its value has already more than tripled over the last few months.

Investors have been pouring their money into all of Beximco Group's concerns for the past few months, so all the stocks have been rising, said a merchant banker preferring anonymity.

Some of the companies performing well for the past few months include Beximco, Beximco Pharmaceuticals, IFIC Bank and Shinepukur Ceramics, all of which are concerns of Beximco Group.

"So, most of those companies are now overvalued," the merchant banker said, adding that some of these stocks may lead to losses.

Against this perspective, investors should channel their money considering a company's potential and performance, he said.

The DSE's turnover, an important indicator of the market, rose 19 per cent to Tk 1,454 crore.

Newly listed Energypac Power Generation topped the gainers' list, rising 9.92 per cent, followed by Nitol Insurance, Shyampur Sugar Mills, Shinepukur Ceramics and Northern Insurance.

Paramount Insurance Company shed the most, falling 7.61 per cent, followed by Eastern Insurance Company, Peoples Insurance Company, Mercantile Insurance Company and Northern Islami Insurance.

The port city bourse also fell yesterday as the general index of the Chittagong Stock Exchange, the CASPI, dropped 34 points, or 0.20 per cent, to 16,986.

Among the 253 stocks to witness trade, 67 advanced, 145 fell and 41 remained unchanged.