The Hindu : Business : Daiichi to take control of Ranbaxy

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Thursday, Jun 12, 2008
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Business

Daiichi to take control of Ranbaxy

Sandeep Joshi

Deal size valued at $4.6 billion; to acquire promoters’ stake of 34.82 %

Malvinder Singh
will continue to
lead the company

Post-acquisition
RBL will become
a debt-free firm

— PHOTO: AFP

ECONOMIES OF SCALE: Researchers conduct tests at the Ranbaxy Laboratories in Mumbai.

NEW DELHI: Japanese drug major Daiichi Sankyo Company will acquire majority stake in Ranbaxy Laboratories Ltd. (RBL). Under the deal valued for up to $4.6 billion, Daiichi Sankyo would purchase the entire 34.82 per cent stake from its promoters (Malvinder Singh and family), and later give an open offer to the public shareholders for 20 per cent of Ranbaxy’s shares.

“Daiichi Sankyo is expected to acquire the majority equity stake in Ranbaxy by a combination of purchase of shares held by the sellers; preferential allotment of equity shares; an open offer to the public shareholders for 20 per cent of Ranbaxy’s shares, as per Indian regulations; and Daiichi Sankyo’s exercise of a portion or all of the share warrants to be issued on a preferential basis. All the shares/warrants will be acquired/issued at a price of Rs. 737 per share,” said a company statement here.

Malvinder Singh will, however, continue to lead the company as its CEO and Managing Director, also hold the position of Chairman of the board upon closure of the deal, which is expected by March 2009. Post-deal, the combined market capitalisation of both companies would be around $30 billion, making it the world’s 15th largest pharmaceutical company.

Commenting on the deal, Mr. Singh said: “Together with our pool of scientific, technical and managerial resources and talent, we would enter a new orbit to chart a higher trajectory of sustainable growth in the medium and long term in the developed and emerging markets organically and inorganically. This is a significant milestone in our mission of becoming a research-based international pharmaceutical company. As the company moves into a next level of growth it would benefit the organisation, its shareholders and the employees.”

According to Daiichi Sankyo President and CEO Takashi Shoda, “The proposed transaction is in line with our goal to be a global pharma innovator and provides the opportunity to complement our strong presence in innovation with a new, strong presence in the fast growing business of non-proprietary pharmaceuticals.”

Daiichi Sankyo has operations in 21 countries, and by entering into agreement with Ranbaxy, their presence would increase to 60 countries, he added.

Ranbaxy said the proposed open offer price of Rs.737 represents a premium of 53.5 per cent to Ranbaxy’s average daily closing price on the National Stock Exchange for the three months ending June 10. Besides, the offer price is 31.4 per cent higher than Tuesday’s closing price.

Post acquisition, Ranbaxy Laboratories would become a debt-free firm with a cash surplus of around Rs. 2,800 crore.

PTI reports:

Earlier deals to stay

The Japanese firm said there would be ten members in the board and Ranbaxy would appoint four members, Mr. Singh, while the rest of the members would be from Daiichi Sankyo.

Explaining the deal Mr. Singh said, post-closing Ranbaxy would continued to remain an independent identity and all the strategic tie-ups of the company, including the deals with Zenotech, Orchid and Merck would remain unaffected.

The hived-off research and developed division of the firm would remain with the company.

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