Matrix Laboratories Ltd and Strides Arcolab Ltd on Saturday said they have called off the proposed merger as the two companies were unable to reach an agreement on valuation.
In a joint statement, Matrix Laboratories executive chairman N Prasad and Strides Acrolab Group CEO and managing director Arun Kumar said, "The intention of merger was based on a strong business strategy and the potential benefits of integration. However, while it is unfortunate that the agreement could not be reached on valuation, the managements of the two companies recognise and will harness the strategic relationship envisaged in the rationale of the merger."
"Managements of both the companies respect each others businesses and will continue to grow them independently while combining the strengths for mutual benefits," the joint statement said.
Matrix said in line with such mutually beneficial business objective, Strides will license a range of hospital injectable products to Docpharma (recently acquired by the Matrix) for Benelux markets and it will further strengthen cooperation agreements in the Anti Retro Viral (ARV) business Strategy by enhancing the scope of the present understanding.
The cancellation of the merger has put off the two companies' attempt to jump jointly into the premier league of Rs 1,000 crore-plus pharmaceutical companies.
In their in-principle agreement announced in June, Matrix and Strides said the combined sales of the two companies for the 12-month period ended March 2005 stood at over Rs 1,000 crore (Rs 10 billion) and net profits in excess of Rs 170 crore (Rs 1.70 billion).
The merged entity was proposed to be named Matrix Strides Ltd. Had the merger worked out, Matrix Strides would have operations in over 70 countries with manufacturing operations in India, the United States and Latin America.
While Matrix is predominantly into active pharmaceuticals and intermediates, Strides is more focussed on finished dosages. The combined entity would have 20 advanced manufacturing facilities spread globally -- six APIs (active pharmaceutical ingredients), five intermediates and nine finished dosages facilities. These include four USFDA approved API facilities and two intermediate plants.
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