Daiichi's Acquisition of Ranbaxy

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  • Topic: Generic drug, Ranbaxy Laboratories, Daiichi Sankyo
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  • Published : December 13, 2012
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A basic introduction to the Daiiichi - Ranbaxy acquisition

RANBAXY LABORATORIES LIMITED
Ranbaxy Laboratories Limited, India's largest pharmaceutical company, was an integrated, research based, international pharmaceutical company producing a wide range of quality, affordable generic medicines, trusted by healthcare professionals and patients across geographies. It was incorporated in 1961 by Singh's grandfather Bhai Mohan Singh, further his son Dr. Parvinder Singh succeeded it, transforming Ranbaxy into India’s first multinational drug firm. It went public in 1973. In 1990 Ranbaxy Granted US patent for DoxyCyline. In 1992 Ranbaxy entered into an agreement with Eli Lilly & Co. of USA for setting up a joint venture in India to Market Select Lilly Products. It was Ranked 8th amongst the global generic pharmaceutical companies, its stated vision has been to be among the top five global generic players and to achieve global sales of $5 billion by 2012. Ranbaxy had a presence in 23 of the top 25 pharmaceutical markets of the world. The Company had a global footprint in 49 countries, world-class manufacturing facilities in 11 countries and served customers in over 125 countries. It had 12,000 employees, including 1,200 scientists. Mr. Atul Sobti was the then CEO & MD of Ranbaxy Laboratories at the time of the merger.

DAIICHI SANKYO COMPANY, LIMITED
Dai-Ichi Karkare Limited (DIKL) was set up in 1960 as a private limited company for the manufacture of specialty chemicals. The Company entered into technical collaboration with the internationally known specialty chemicals manufacturer Dai-Ichi Kogyo Seiyaku Co. Limited of Kyoto, Japan (DKS) and commenced commercial production in 1963. A global pharmacy innovator, Daiichi Sankyo Company, Ltd., was established in 2005 through the merger of two leading Japanese pharmaceutical companies under the head of Takashi Shoda, CEO of Daiichi Sankyo. This integration created a more robust organization that allowed for continuous development of novel drugs that enrich the quality of life for patients around the world. Dai-Ichi Karkare Limited (DIKL) was set up in 1960 as a private limited company for the manufacture of specialty chemicals. The Company entered into technical collaboration with the internationally known specialty chemicals manufacturer Dai-Ichi Kogyo Seiyaku Co. Limited of Kyoto, Japan (DKS) and commenced commercial production in 1963.

RANBAXY-DAIICHI SANKYO DEAL
On 12th June 2008, Ranbaxy entered into an alliance with one of the largest Japanese innovator companies, Daiichi Sankyo Company Ltd., to create an innovator and generic pharmaceutical powerhouse. Daiichi Sankyo Co. Ltd. signed an agreement to acquire 34.8% of Ranbaxy Laboratories Ltd. from its promoters. Daiichi Sankyo expected to increase its stake in Ranbaxy through various means such as preferential allotment, public offer and preferential issue of warrants to acquire a majority in Ranbaxy, i.e. at least 50.1 %. Under the deal, Daiichi Sankyo agreed to acquire 34.8 per cent stake for around Rs. 10,000 Crore ($2.4 billion) at Rs. 737 ($17) per share, at a premium of 31% over the price. (Current price 561 and Deal price is 737 from the promoters Mr. Malvinder Singh and family.) The Japanese company had agreed to acquire 34.81 per cent of the stake of the company; The Company would also make an open offer. The open offer made to the public shareholders for acquiring another 20 per cent at Rs 737 a share that increase Daiichi Sankyo’s stake in the company to a maximum of 58.09 per cent. Daiichi Sankyo picked up another 9.5 per cent through preferential allotment of equity shares and another 4.5 per cent through share warrants to be issued on a preferential basis. Deal Structure

After the acquisition, Ranbaxy will operate as Daiichi Sankyo’s subsidiary but will be managed independently under the leadership of its current CEO & Managing Director Malvinder Singh. The deal made Daiichi-Ranbaxy, the combined...
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