Ranbaxy is a well known name in pharamaceutical company in India, with large amount of shares both in Bombay and National stock exchange. But they have now sold major amount of shares to the Japanese company Dai-ichi here is a little more news from news desk.
TOKYO/MUMBAI (Thomson Financial) – Daiichi Sankyo Co Ltd. said it will acquire a controlling stake in India’s Ranbaxy Laboratories Ltd. for up to $4.6 billion to strengthen its overseas prescription drug business, in a deal touted to be the largest among listed Indian companies.
Japan’s second-largest drugmaker said the acquisition will cost 368.5 billion to 495 billion yen ($3.4 billion to $4.6 billion) or 147.4 billion to 198 billion rupees.
Japanese drugmakers have been acquiring overseas rivals to expand their global presence amid stiffer competition and to boost their product pipelines with the expiry of some drug patents.
Daiichi Sankyo will buy out the entire promoter stake of 35 per cent in Ranbaxy Laboratories at Rs 737 per share. Daiichi’s offer for Ranbaxy amounts to $2.7-3.7 billion approximately.
Daiichi’s stake buy in Ranbaxy will trigger an open offer, which will also be priced at Rs 737 per share. Ranbaxy will make a preferential issue to Daiichi. Daiichi is eyeing a 51 per cent stake in Ranbaxy.
Consecutively, Daiichi will make an open offer for Zenotech. I-Sec and Nomura were the advisors in this deal.
The Daiichi deal values Ranbaxy at $8.5 billion market cap. The existing management will still continue under CEO and MD, Malvinder Singh.
Singh also become a member of the senior global management of Daiichi. Ranbaxy will become debt free after the deal and get $1 billion in cash. Ranbaxy will pursue inorganic growth opportunities more aggressively.
The Daiichi-Ranbaxy deal is valued at 4.3 times sales and 21 times EBITDA on historical earnings. The stake buy is expected to be completed by March 2009.
Daiichi will fund the stake buy via internal accruals and debt, said Ranbaxy management.
Ranbaxy has a market cap of around $5 billion and this amount represents 70 per cent premium over its current market cap.
Ranbaxy management said this deal will help the company emerge as a global research firm. Ranbaxy is expected to become a subsidiary of Daiichi.
This is the first generics-proprietary partnership in global pharma.
According to CNBC-TV18’s pharma analyst Vikas Dandekar, Daiichi has been looking at India from an Active Pharmaceutical Ingredients (API) perspective more than a brand presence.
A couple of years ago, GVK Biosciences had sold some stake to Daiichi and that was the beginning of Daiichi in India.
Takeda Pharmaceuticals has been a more conservative Japanese company but Daiichi seems to be very interested in India.
It’s very unclear whether they really have genuinely direct interest in generic business. Daiichi’s buying of Ranbaxy stake probably means they have a bigger play in mind because Japanese generic market is opening up very fast.
So that is also one reason why they want to pick up Ranbaxy stake.
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