Ivey Publishing
Strides Arcolab Limited's Dividend Payout Decision
Product Number:
9B15N011
Publication Date:
07/22/2015
Revised Date:
11/02/2015 (Format Change)
Length:
16 pages (9 pages of text)
Product Type:
Case (Field)
Source:
Ivey
Arun Kumar, founder and group chief executive officer of Strides Arcolab Limited — a first generation, Indian pharmaceutical company headquartered in Bengaluru — is preparing for a crucial meeting of the Board of Directors. The meeting was called to discuss the proposed dividend payout to the company’s shareholders following the completion of a US$1.725 billion sale of its specialty division — Agila Specialties — to the U.S.-based pharmaceutical company Mylan Inc. Kumar proposed that Strides distribute all the free cash available from the sale — after the retirement of debt and internal payouts — in the form of dividends to its shareholders. Strides had already communicated its decision to retire debts and reduce its leverage.
Learning Objective:
Students should understand the following:
  • The alternative ways a firm can distribute cash to its stockholders — share buybacks (repurchases) vs. dividends.
  • The dividend decision and strategic factors affecting it.
  • Analysis of the dividend policy using an appropriate framework.
  • Investor preferences regarding dividends as well as the signaling and clientele effects.
Issues:
Disciplines:
Finance,  Entrepreneurship,  International
Industries:
Health Care Services
Setting:
India, Large, 2013
Intended Audience:
MBA/Postgraduate
Price:
$4.25 CAD / $4.25 USD Printed Copy
$3.75 CAD / $3.75 USD Permissions
$3.75 CAD / $3.75 USD Digital Download
Associated Materials
Supplements: 7B15N011 (27 KB)
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