Japanese drugmaker Daiichi Sankyo gobbles Ranbaxy Laboratories for $4.6 billion
Ranbaxy not to spin off R&D unit; Daiichi will become 15th largest drugmaker in the world
In what is seen as India's biggest acquisition deal in the pharmaceutical sector, Japanese drugmaker Daiichi Sankyo Co. said it has reached an agreement with India's largest generics drugmaker Ranbaxy Laboratories Ltd. which will see the former acquire the latter's majority stake for around $4.6 billion (£2.3 billion).
According to the terms of the deal, Daiichi will buy the promoters' entire 34.8 percent stake at Rs.737 ($17.19) each, a 31.4 percent premium to its Tuesday's closing price.
The Japanese firm will also make the mandatory open offer to buy 20 percent more. The tender offer runs throughout March 2009.
While the deal puts Ranbaxy's enterprise value at around $8.4 billion, the combined company will be worth about $30 billion.
Once the deal is completed, Ranbaxy will become a subsidiary of the Japanese drugmaker.
While the deal means complete exit for the Singh family, the promoters of Ranbaxy, the firm's present managing director and CEO, Malvinder Mohan Singh will continue in his current post for sometime. Singh is also expected to take on the additional role of the chairman of the new board upon closure of the deal.
The acquisition will help Daiichi tap emerging markets including the Middle East, market analysts said, and increase Daiichi's presence to 60 countries from the present 21. It will also help the Japanese firm catch up with rivals Takeda Pharmaceutical Co. and Eisai Co Ltd. which acquired US biotech firm Millennium Pharmaceuticals and MGI Pharma respectively in deals worth more than $8 billion and $3.9 billion and even challenge the likes of US-based generics major Mylan and Israel-based Teva Pharmaceuticals.
According to Takashi Shoda, president and CEO, Daiichi Sankyo, the funds for the acquisition would be raised through a mix of debt and internal accruals.
"The company (Ranbaxy) will remain listed (in India). Ranbaxy's name is prestigious and there will be no change in Ranbaxy's identity. Whatever we do in India will be done through Ranbaxy," Shoda said.
The deal, Shoda said, "represents a perfect strategic fit and delivers a considerable opportunity for the future growth of the new Daiichi Sankyo Group" and is "in line with our goal."
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