Daiichi Sankyo picks up majority stake in Ranbaxy for $4.6 bln

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New Delhi, June 11 (UNI) Pharmaceutical major Ranbaxy Laboratories Ltd today announced that Japanese drug maker Daiichi Sankyo Company Ltd will acquire majority stake in the company, including the entire share of promoter Singh family, for 4.6 billion dollars.

Under the binding Share Purchase and Share Subscription Agreement signed between the two companies, Daiichi Sankyo will purchase 34.8 per cent of the Singh family, and make an open offer for a further 20 per cent share of Ranbaxy, the country's largest pharmaceutical firm, as per Indian regulations, at a price of Rs 737 per share which represents a 31.4 per cent premium to its closing share price of yesterday.

This is the biggest deal in the pharma sector in the country and the second-largest foreign acquisition of an Indian company after the Hutch-Vodafone deal.

''The strategic alliance with Daiichi Sankyo, a leading research-based pharmaceutical company will put us on a new and much stronger platform to harness our capabilities in drug development, manufacturing and global reach,'' Ranbaxy CEO-cum-MD Malvinder Mohan Singh told reporters here.

The total transaction value is expected to fetch between 3.4 billion dollars to 4.6 billion dollars, he said, adding that the deal values the company's market capitalisation at 8.5 billion dollars.

The agreement allows Daiichi Sankyo to buy at least 50.1 per cent of Ranbaxy's voting rights through March 2009, Mr Singh added.

The Indian pharma major will channel the funds into its other units -- brokerage Religare Enterprises and Fortis Healthcare Ltd.

He also said there would be no change in the management post-acquisition and the existing team will continue. There will be independent members on Board along with representatives from both the companies, the total of which would be 10.

The deal will pave way for new business models of global pharma companies, Mr Singh said and added that both organisations together would have a value of close to 30 billion dollars.

Industry experts have termed the deal as a milestone in the history of Indian pharmaceutical industry calling it a positive development which will lead to the consolidation of the sector.

Daiichi is also expected to make an open offer for 20 per cent of Zenotech Laboratories Ltd, following its acquisition of Ranbaxy, which holds 46.95 per cent stake in Zenotech.

Commenting on the development, Daiichi Sankyo Company Ltd president and Chief Executive Officer Takashi Shoda said, ''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 on non-proprietary pharmaceuticals.'' After the acquisition, Daiichi Sankyo's global reach will be more than doubled from the current 21 countries to 56, and make it around the 15th largest pharmaceutical company in the world, Mr Shoda said.

The deal with Ranbaxy, which is a major producer of generic drugs, allow the Japanese pharma major to expand its operation in generic drug production and sales to adapt to rapidly-changing market needs.

The deal will be financed through a mix of bank debt facilities and existing cash resources of Daiichi Sankyo and is expected to be completed by the end of March 2009.

Ranbaxy will get one billion dollar in cash and will be debt-free after the Daiichi deal.

Upon completion of the transaction, Ranbaxy will become a subsidiary of Daiichi Sankyo and Malvinder Mohan Singh will remain its Chief.


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