Shasun Pharma had announced in Sept 2014 that it will merge with Bangalore-based Strides Arcolab to form a vertically integrated larger pharma company. The proposal was approved the boards of the two companies. Under the scheme of amalgamation, Shasun shareholders were to get five Strides shares for every 16 shares held by them in Shasun.  And post this M&A, Shasun shareholders were to own 26% of the combined firm. It got the CCI approval too in March’15.

But now, the Govt has thrown a spanner in this wheel. Strides Arcolab had made an application to Foreign Investment Promotion Board (FIPB) seeking approval for issuing equity shares to non-resident shareholders of Shasun under the proposed scheme of amalgamation. The application was considered by the FIPB at their meeting held on May 28, 2015. But yesterday, the company was informed that its application was rejected.

Those in the know say that this rejection by FIPB was just a hurdle and not a deal breaker. With the CCI finding no objections, once technical issues are resolved, this merger will go through.

The market though is not happy with this rejection – Shasun is down currently 5% at Rs.337 and Strides Arcolab, which had gone down to Rs. 1090.80 has since then recovered; though still in the red, it is at Rs.1143.