Ranbaxy LaboratoriesPharma major Ranbaxy Laboratories has missed the deadline for conversion of equity warrants issued by Jupiter Bioscience. This has put a question mark on the deal which would have given Ranbaxy a 15% stake in Jupiter. According to market circles, Ranbaxy is reluctant to convert the warrants as it feels that the investment may not generate the expected returns.

Jupiter had issued 3.2 million warrants on May 28, 2007. The last date for conversion was November 28, 2008 — 18 months from the issue. But till December 31, the conversion did not take place, which is evident from the stock exchange list of Jupiter shareholders in which Ranbaxy does not figure.

Jupiter Bioscience shares were quoting at Rs 186 at the time of allotment of the warrants. Since then, the stock has slipped and is currently quoting at Rs 39, after touching a low of Rs 35 on December 2, 2008. "When the current price is Rs 40, it does not make sense for Ranbaxy to convert the warrants at Rs 145. Besides, Ranbaxy’s management has changed. Perhaps, the new management is not interested," said Sarabjit Nangra of Angel Broking. Ranbaxy did not respond to mails from ET.

While announcing the deal, Ranbaxy had said that it has plans to tap the $6-billion global peptide pharmaceutical market and Jupiter was one of the leading producers of peptide — a niche biotech product. Jupiter Bioscience did not comment on whether Ranbaxy would convert the warrants.

A senior Jupiter Bio official said: "The relationship between Jupiter and Ranbaxy was primarily a business alliance. The objective was to combine the R&D capabilities and manufacturing competence — primarily related to Peptides — of Jupiter with the international marketing reach of Ranbaxy. Jupiter has developed the relevant products and these are ready for manufacturing at its GMP compliant manufacturing facility in Europe. Our CEO Mr. Ramana is meeting the top management of Ranbaxy later this month to discuss the next steps in the business alliance."

Under the current circumstances, there are two possibilities. The warrants can be cancelled if Ranbaxy is unwilling to convert them into equity; otherwise Jupiter can seek Sebi approval for extension of the conversion period.