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Singhs exit Ranbaxy
Japanese firm Daiichi to buy over 50 pc stake in
biggest pharma deal

New Delhi, June 11
Marking the largest ever deal in Indian pharma industry, Japanese drug firm Daiichi Sankyo today announced the acquisition of a majority stake of more than 50 per cent in domestic major Ranbaxy for over Rs 15,000 crore.

Under the deal structure that would create the 15th biggest drugmaker globally, the Japanese firm would acquire the entire 34.82 per cent stake in the Gurgaon-based firm from its current promoters Malvinder Singh and family.

Besides, Daiichi would also make an open offer for an additional 20 per cent stake in Ranbaxy at a price of Rs 737 per share which represents a premium of over 50 per cent on the average price over the last three months.

Post this offer, the deal would value Ranbaxy at about $8.5 billion (over Rs 36,000 crore). The purchase of shares from the promoters and through the open offer is expected to value the deal between $3.4-4.6 billion, the two firms said in a joint statement.

Even as Malvinder Singh would continue as CEO and managing director of the entity, which would retain its Ranbaxy brand, the family would net in about Rs 10,000 crore by selling their stake.

Singh would also assume the position of chairman of the board upon the deal's closure that is expected by March 2009.

Besides the promoters' 34.8 per cent stake, Daiichi would also get about 9 per cent through issue of preferential allotment of shares and some warrants, which could be later converted into another 4.5 per cent holding. These, along with a minimum 8 per cent that the new promoters wish to acquire through the open offer, would take Daiichi's holding to above 50 per cent.

Post acquisition, Ranbaxy would become a debt-free firm with a cash surplus of around Rs 2,800 crore.

The two firms said they plan to keep Ranbaxy a listed entity in India. The combined market capitalisation of both companies would be around $30 billion making it the world's 15th largest pharmaceutical company.

A binding share purchase and share subscription agreement was entered into by Daiichi Sankyo, Ranbaxy and the Singh family, Ranbaxy said.

"As the company moves into a next level of growth it would benefit the organisation, its shareholders and the employees," Ranbaxy CEO and managing director Malvinder Mohan Singh told reporters while adding," Now it is a clear opportunity ahead of us to leverage from each others' strengths.

The proposed open offer price of Rs 737 represents a premium of 53.5 per cent to Ranbaxy's average daily closing price on the NSE for the three months ending June 10, 2008.

Besides, the offer price is 31.4 per cent higher than yesterday's closing price, Ranbaxy said.

"Malvinder Singh will continue to lead the company as its CEO and managing director, while additionally assuming the position of chairman of the Board," Daiichi Sankyo president and CEO Takashi Shoda said.

The Japanese firm said there would be 10 members in the board and Ranbaxy would appoint four members, including Malvinder Singh, while the rest of the members would be from Daiichi Sankyo.

"Daiichi Sankyo has operations in 21 countries and by entering into agreement with Ranbaxy, we will have presence in now 60 countries globally," Shoda said. PTI

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Ranbaxy fact sheet

A view of Ranbaxy plant at Mohali.
A view of Ranbaxy plant at Mohali. Tribune photo: Vicky Gharu

New Delhi, June 11
The following is a fact sheet on Ranbaxy Laboratories Ltd, India's largest pharmaceuticals company, which will now become a subsidiary of Daiichi Sankyo of Japan after a $4.6 billion deal announced on Wednesday.

  • Founder: Late Bhai Mohan Singh Incorporation: 1961 (public issue in 1973)

  • Initiator of globalisation: Late Parvinder Singh (son of founder)

  • Managing director and CEO: Malvinder Mohan Singh (son of Parvinder Singh)

  • Non-executive chairman: Harpal Singh

  • Turnover: $1.62 billion in 2007

  • Domestic sales: $301 million in 2007

  • Largest market: North America, contributing 26 per cent of sales

  • Positioning in India: Largest drugs maker in $7.3 billion industry

  • Global positioning: Ranked among top 10 global generic drug companies

  • Global footprint: Presence in 23 of the top 25 global drugs markets

  • Manufacturing: Facilities in 11 countries

  • Subsidiaries: Fortis Healthcare, Religare, Ranbaxy Pharmaceuticals

  • Areas of strength: Generic, out-of-patent, drugs

  • New initiatives: Oncology, Peptides and Limuses

  • Current stock price: Rs 592 per share (face vale Rs 5)

  • Prompters' stake: 34.8 per cent (valued at $2.4 billion)

  • Valuation after Daiichi Sankyo deal: $8.9 billion

  • Low point: Ownership battle between Bhai Mohan Singh and Parvinder Singh in early 1990s

  • High points: Acquistion of Terpia of Romania for $324 million; acquisition of Be Tabs of South Africa for $70 million. IANS

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