Shares of biopharmaceutical company Biocon rose nearly 6.5 per cent on the BSE on Tuesday after reports emerged that Mylan, a unit of Viatris, is seeking to sell its stake in the firm through a block deal, a move analysts described as a logical financial transaction rather than a reflection of Biocon’s underlying business prospects.
The proposed block deal, valued at around ₹3,481 crore, is being launched after the expiry of the lockin period of the shares that Mylan received as part of the Biocon Biologics transaction, according to market participants.
Investors appeared to view the sale as the removal of a long-anticipated overhang on the stock, they added.
Biocon’s shares closes at ₹437.30.
Nirali Shah, research analyst at Ashika Investment Managers, said the proposed stake sale was a natural outcome of Biocon’s restructuring exercise.
“Viatris’ shareholding in Biocon was created as part of the consideration for the Biocon Biologics transaction and, with the lockin period having expired, monetisation is a logical capital allocation decision,” Shah said.
She added the transaction should not be interpreted as a change in Biocon’s business outlook or growth prospects.
“For Biocon and its shareholders, with a known overhang now behind them, the focus can shift back to the underlying business performance and the company’s ability to deliver,” Shah said.
Analysts say the sale is unlikely to alter the strategic relationship between Biocon Biologics and Viatris, which continues to have commercial arrangements following the biosimilar-business transaction.
The positive market reaction suggests investors are looking beyond the change in shareholding and focusing instead on Biocon’s execution in its biosimilars and specialty businesses. The removal of a large shareholder overhang could also improve investor sentiment by eliminating uncertainty over a large secondary share sale.
Business Standard reached out to both Biocon and Viatris for comments but did not receive a response till the time of going to press.
