Famous Japanese pharmaceutical company, Daiichi Sankyo Company Limited (TYO: 4568), is buying 34.8% shares of Ranbaxy Laboratories Ltd. (BOM:500359), the largest pharmaceutical company of India. Daiichi Sankyo is going to buy up the shares of the Singhs (Malvinder Singh and Shivinder Singh), the founding family of the company. Daichii is going to pay Rs 737 per share. The total deal is going to worth $3.4 billion to $ 4.6 billion making it one of the biggest buy outs by any multinational company in India. After the deal, the Singh family will lose the controlling power over the company; however, Malvinder Singh will work as Managing Director for some time. Daiichi Sankyo is aiming for 51% stake of the company. According to the Indian law, the company will make an open offer to buy up 20% shares of Zenotech Laboratories Ltd. (BOM:532039) Ranbaxy has a 49.65% stake in Zenotech.
Times of India reports:
The deal represents a major foray into the field of generic drugs by Daiichi Sankyo and would be the latest in a string of large overseas acquisitions by Japanese drug makers.
Shares in Daiichi Sankyo, best known for its high blood pressure medication Benicar and the experimental blood thinner prasugrel, ended nearly 5 per cent higher on early reports of a deal while Ranbaxy's shares were also up.
The total transaction value is expected to be worth between $3.4 billion to $4.6 billion, the companies said in a statement.
"There's a global move to generics and Japan's a bit behind on this," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said after reports of the deal.
Mr. Akino also said that the real merit behind the deal is that Daiichi Sankyo has now access not only to the Indian drug market but also drug market of other countries because Ranbaxy sales its products in 125 countries and it has production facilities in seven countries.
Daiichi Sankyo Company Limited is the second largest pharmaceutical company of Japan. As per its business expansion strategy, the company is buying up shares of Ranbaxy Pharmaceuticals. Daiichi Sankyo’s major domestic rival, Takeda Pharmaceutical Company Limited (TYO:4502), bought up U.S. biotech company Millenium Pharmaceuticals Inc. for $8.8 billion and Eisai Co.Ltd.,(TYO:4523) acquired MGI Pharma Inc.( NASDAQ:MOGN) for $3.9 billion.
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