Cadila sets share swap ratio for consumer unit demerger

MUMBAI, July 4 (Reuters) - Cadila Healthcare Ltd's (CADI.BO: Quote, Profile, Research) shareholders will get 4 shares in subsidiary Carnation Nutra-Analogue Foods Ltd (CNAF.BO: Quote, Profile, Research) for every 15 held, following the merger of its consumer products division into Carnation, the drug firm said.

The move is part of a restructuring plan which also involves the merger of Zydus Hospital and Medical Research Pvt Ltd, Cadila's majority shareholder, into Cadila in return for 100.9 million shares.

The 90 million shares that Zydus Hospital currently owns in Cadila will be cancelled post merger, the company said in a statement.

"It made strategic business sense to create synergies for similar businesses and strengthen long term business prospects for the group's consumer products business," Cadila's managing director Pankaj Patel told an analyst meet.

After the merger, Cadila's stake in Carnation will rise to a little over 70 percent from the current 61.6 percent, Cadila's Shirish Maniar, senior vice president, corporate finance said.

The entire process is expected to be completed by early 2009.

Cadila's consumer division, which includes the 'Sugar Free' sugar substitute brand and 'EverYuth' range of skin care products, had sales of 979 million rupees in 2007/08.

Carnation makes margarine brand 'Nutralite' and recorded sales of 563 million rupees last year.

Ahmedabad-based Cadila is also expected to post a 22-25 percent net profit growth and an income growth of 18-20 percent for the year to March 2009 on a consolidated basis, Patel said.