In one of the biggest buy outs of any Indian company by an MNC, Japanese major Daiichi Sankyo has picked up the promoters - Malvinder Singh and Shivinder Singh's - 34.8% stake at Rs 737 per share in drugmaker Ranbaxy Labarotaries.
This means complete exit of Ranbaxy promoters from the company. However, the senior Singh (Mr Malvinder Singh) is expected to continue to head the management for sometime.
The story was first broken by The Economic Times . As ET reported earlier, the Japanese company may buy the promoters' stake at Rs 737 per share or around 30% premium over Ranbaxy's share price of Rs 560.75 on Tuesday. At this share price, the company is valued at around Rs 27,492 crore while the promoters will get around Rs 9,573 crore.
The Japanese major will also make a mandatory open offer, as per the Indian laws, to buy an additional 20% stake in the company. The source added that Daiichi Sankyo plans to hold a controlling 51% stake in the Indian company.
Meanwhile, shares of the company rose to their highest in 3-½ years on Wednesday after the Nikkei business daily said Japan's Daiichi Sankyo wanted to buy more than 50 per cent of the Indian firm in a deal worth up to $3.7 billion. The paper said Daiichi Sankyo was planning to launch a bid worth 300 billion yen to 400 billion yen ($2.8 billion-$3.7 billion) for the stake in India's top drugmaker by sales and an announcement was expected later in the day.
Meanwhile, shares of the company rose to their highest in 3-½ years on Wednesday after the Nikkei business daily said Japan's Daiichi Sankyo wanted to buy more than 50 per cent of the Indian firm in a deal worth up to $3.7 billion. The paper said Daiichi Sankyo was planning to launch a bid worth 300 billion yen to 400 billion yen ($2.8 billion-$3.7 billion) for the stake in India's top drugmaker by sales and an announcement was expected later in the day.
"I am delighted to announce our association with Daiichi Sankyo, a leading research based pharmaceutical company that puts us on a new and much stronger platform to harness our capabilities in drug development, manufacturing and global reach. Together with our pool of scientific, technical and managerial resources & 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,” Ranbaxy Laboratories Limited CEO and Managing Director Malvinder Mohan Singh 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" said Takashi Shoda, President & CEO of Daiichi Sankyo Company, Limited. "This complementary combination represents a perfect strategic fit and delivers a considerable opportunity for the future growth of the new Daiichi Sankyo Group. While both companies will closely cooperate to explore how to fully optimize our growth opportunities, we will respect Ranbaxy's autonomy as a standalone company as well. We respect and believe in the management skill of Malvinder Mohan Singh and we are happy that we can invite him to be a member of the "Senior Global Management" of Daiichi Sankyo, while he continues to lead Ranbaxy as its CEO and Managing Director; additionally, upon closing he would assume the position of Chairman of the Board."
"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. "This complementary combination represents a perfect strategic fit and delivers a considerable opportunity for the future growth of the new Daiichi Sankyo Group. While both companies will closely cooperate to explore how to fully optimize our growth opportunities, we will respect Ranbaxy's autonomy as a standalone company as well. We respect and believe in the management skill of Malvinder Mohan Singh and we are happy that we can invite him to be a member of the "Senior Global Management" of Daiichi Sankyo, while he continues to lead Ranbaxy as its CEO and Managing Director; additionally, upon closing he would assume the position of Chairman of the Board."
At 10:25 a.m. (0455 GMT), the stock was trading 1.4 per cent up at Rs 568.50, up 1.3 per cent. The stock rose as much as 5.6 per cent to Rs 591.90, its highest since December 2004. It rose 6.5 per cent on Tuesday, when its market value was $4.9 billion.
Incidentally, Oscar Investments, a promoter group company, which holds 4.76% in Ranbaxy, has informed the BSE on Tuesday that the company is holding a board meeting tomorrow, "to consider and approve the scheme of demerger of investment & trading business of the company."
Among all the promoter group companies that hold shares in Ranbaxy, the value of Oscar's holding in the company is the largest after Ranbaxy Holding Company. Malvinder and Shivinder Singh, the promoters of Ranbaxy, own around 35% of the company.
The Japanese company set foot in India by setting up a wholly-owned subsidiary with a investment of Rs 25 crore in India earlier this year. ET had reported on January 5 that the Japanese major plans to set up a full-fledged manufacturing and research operation in the country.
Sankyo, which merged with Daiichi in 2005, has a small joint venture in India. Its 39.9% holding in Unisankyo Company was brought under the merged entity. The remaining 60.1% stake in this venture is held by a group of local promoters led by Jay Soman. The JV manufactures and markets bulk drugs, pro-biotics and few pharmaceutical products.
Incidentally, this comes within two months of the Burman family of Dabur group exiting the pharma business by selling their 67% stake to German major Fresenius Kabi in April.
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