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Ranbaxy sells its majority stake to Japan's Daiichi
Published on Wed, Jun 11, 2008 at 14:43, Updated on Wed, Jun 11, 2008 at 15:55 in Business section
Tags: Ranbaxy Laboratories, Daiichi Sankyo , Mumbai
CHANGING HANDS: Existing management to continue under CEO and MD, Malvinder Singh.
Mumbai: 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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There is no gain in it for Indian industry or Indians as such. Only Daiichi Sankyo stands to gain. In
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I work for a software firm and have no knowledge what's that Ranbaxy will get out of this sellout. I
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