In a shocking and rapturous deal, India’s biggest drug making company, Ranbaxy Laboratories will not more be an Indian firm as it has made a deal with Japanese second largest drug making company Daiichi Sankyo for selling its major stake to it. This was the largest ever deal in India in which a company ranking amongst the world’s top 10 ones has sold its stakes to a comparatively less famed company.
Malvinder Singh, the Promoter and CEO of Ranbaxy Laborites on Wednesday announced that a binding Share Purchase and Share Subscription Agreement (the “SPSSA”) has been entered among Daiichi Sankyo, Ranbaxy and the Singh family, the largest and controlling shareholders of Ranbaxy who agreed to sell their entire 34.8% stake of his family to Japanese pharmaceuticals company.
The Singh family has sold their stake at Rs.10, 000 crore (USD 2.4billion), but despite of this, Malvinder Singh would continue as the chairman of the board of the Ranbaxy group, as he claimed, “We have not sold the company but made a strategic deal.”
This deal came as a death-blow for the Indian industry and it would definitely leave an impact on the Indian industrial environment and Indian bourses as per market experts’ assumptions.
The Japanese firm has stated that it would further acquire the majority of the voting capital of Ranbaxy at a price of Rs.737 per share, a 31.4% premium over Wednesday’s closing price of Ranbaxy in National Stock Exchange, which would finally transform into the total transaction value ranging from USD 3.4-billion to USD 4.6-billion. On the post-closing basis, the cumulative value of Ranbaxy would be USD 8.5-billion. The deal is expected to end by the end of March, next year.
The acquiring company with regards to the deal has said in its statement, “Daiichi Sankyo is expected to acquire the majority equity stake in Ranbaxy by a combination of purchasing of shares held by the Sellers, preferential allotment of equity shares, an open offer to the public shareholders for 20% 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.”
‘The purchase price would be a premium of 53.5% Ranbaxy’s average daily closing price on the NSE for the last three months ending on June 10, 2008’, Daiichi claimed.
After completing the deal the joint market value of merged firms would rise upto USD 30-billion dollar and it will become the 15th largest pharmaceuticals company in the world.
The deal will be financially aided jointly by a bank debt facilities and existing cash resources of Daiichi Sankyo. After finalising the deal, Ranbaxy Laboratories would become a debt-free firm with a surplus cash of around Rs. 2,800 crore.
Commenting on the deal, Malvinder 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.”
While on the other hand, Takashi Shoda, the president and CEO of Daiichi Sankyo 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 of non-proprietary pharmaceuticals.”
At present, Daiichi Sankyo is functioning in 21 countries but after the acquisition of Ranbaxy, it would raise its entry list to 60 nations, as per Daiichi CEO claimed in the statement.
Earlier, Ranbaxy was originated from a Japanese firm 71 years ago when the original promoter of the company Gurbaksh Singh was employed with Japanese pharmaceutical company A. Shiniogi in Japan and later he found this major drug making company. Now, Ranbaxy again would be the part of a Japanese firm.
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