New Delhi: In a major development, Japanese pharmaceutical company Daiichi Sankyo is set to procure the complete promoter’s stake of 34.82% in one of India’s biggest pharmaceutical company Ranbaxy Laboratories at Rs737 per share. $440 million of FCB will also be converted into equity, present Ranbaxy CEO Malvinder Mohan Singh informed at the company’s press meet to announce the same. The conversion is expected to happen at Rs540- 550 per share. In all, the Japanese Company will have 50.1% stake in the company, said Singh.
With the present valuations, Ranbaxy is now valued at $8.5 billion on diluted basis. It will become a debt free company after the deal. It will also remain listed on the Indian bourses. Religare Capital Advisors were the managers of the deal.
Daichi will acquire the stake through a tender offer and has valued Ranbaxy at $8.8 billion — a 70% premium over existing market capitalisation.
As per the arrangement, Malvinder Mohan Singh will continue to remain the CEO and Managing Director.There will be no change in the company’s present management. Singh will also be a part of the Daiichi global management team and global board.
“Additionally, upon closing he would assume the position of Chairman of the Board,” an official release said.
The value of the deal is expected to be above $3 billion.
At present (up to 31, March 2008), FII and institutional investors hold close to 41.28%. The general public holds around 18.53% in Ranbaxy.
For the full year ended December 2007, the company reported an operating income of Rs4,293.02 crore with net income of Rs617.72 crore.
Daiichi Sankyo is the joint holding company established in 2005 by Sankyo Co and and Daiichi Pharmaceuticals, both based out of Japan.
“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” said Takashi Shoda, President & CEO of Daiichi Sankyo Company, Limited.
The closing of the transactions is subject to approval of shareholders of Ranbaxy and customary regulatory and statutory approvals. The acquisition is expected to be completed by the end of March 2009. Upon completion, Ranbaxy is expected to become a subsidiary of Daiichi Sankyo.
The Street gave a thumbs-up to the development with the stock moving up 1% to Rs565 levels in noon deals.
“The deal would be a win-win for Ranbaxy and Daiichi, as the latter can leverage the low cost advantage offered by India complemented by the world class infrastructure, while Ranbaxy would benefit from the product pipeline of Daiichi,” said Sarabjit Kour Nangra-VP-Research Angel Broking.
With the combined resource pool the company would be a strong contender in both the generic as well as innovator space. “Daiichi will be amongst the largest generic manufacturers globally in terms of market share after the merger. For the Ranbaxy investor, this deal brings together compliemntary business capabilities,” says Frost and Sullivan’s South Asia & Middle East industry manager, Healthcare Practice, Shivani Shukla Raval.