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    Ranbaxy Sankyo

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    Vineet Saraf
    The document summarizes the acquisition of Ranbaxy Laboratories by Daiichi Sankyo. Daiichi Sankyo agreed to acquire the 35% stake of the Singh family in Ranbaxy, subscribe to new shares and warrants, and make an open offer to purchase 20% of remaining shares. This represented the first acquisition of a generic company in India by a proprietary pharmaceutical company. The deal was valued at $4.6 billion and allowed the Singh family to sell their long-held stake at a significant premium. It also provided Ranbaxy with capital for growth opportunities while giving shareholders a chance to cash out at a premium. The acquisition provided Daiichi Sankyo with entry into the growing generic market in India

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    Ranbaxy Sankyo

    Uploaded by

    Vineet Saraf
    417 views12 pages
    The document summarizes the acquisition of Ranbaxy Laboratories by Daiichi Sankyo. Daiichi Sankyo agreed to acquire the 35% stake of the Singh family in Ranbaxy, subscribe to new shares and warrants, and make an open offer to purchase 20% of remaining shares. This represented the first acquisition of a generic company in India by a proprietary pharmaceutical company. The deal was valued at $4.6 billion and allowed the Singh family to sell their long-held stake at a significant premium. It also provided Ranbaxy with capital for growth opportunities while giving shareholders a chance to cash out at a premium. The acquisition provided Daiichi Sankyo with entry into the growing generic market in India

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    this is a presentation on ranbaxy and sankyo deal.

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    The document summarizes the acquisition of Ranbaxy Laboratories by Daiichi Sankyo. Daiichi Sankyo agreed to acquire the 35% stake of the Singh family in Ranbaxy, subscribe to new shares and warrants, and make an open offer to purchase 20% of remaining shares. This represented the first acquisition of a generic company in India by a proprietary pharmaceutical company. The deal was valued at $4.6 billion and allowed the Singh family to sell their long-held stake at a significant premium. It also provided Ranbaxy with capital for growth opportunities while giving shareholders a chance to cash out at a premium. The acquisition provided Daiichi Sankyo with entry into the growing generic market in India

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX or read online from Scribd
    Download as pptx
    417 views12 pages

    Ranbaxy Sankyo

    Uploaded by

    Vineet Saraf
    The document summarizes the acquisition of Ranbaxy Laboratories by Daiichi Sankyo. Daiichi Sankyo agreed to acquire the 35% stake of the Singh family in Ranbaxy, subscribe to new shares and warrants, and make an open offer to purchase 20% of remaining shares. This represented the first acquisition of a generic company in India by a proprietary pharmaceutical company. The deal was valued at $4.6 billion and allowed the Singh family to sell their long-held stake at a significant premium. It also provided Ranbaxy with capital for growth opportunities while giving shareholders a chance to cash out at a premium. The acquisition provided Daiichi Sankyo with entry into the growing generic market in India

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX or read online from Scribd
    Download as pptx
    of 12

    RANBAXY-DAIICHI

    SANKYO DEAL

    Presented By
    Vineet Saraf
    Why this became a NEWS
    Ranbaxy is a very high profile generic pharma
    company in India
    Deal represents the first foreign acquisition of a
    controlling stake in a listed Indian entity
    Will lead to the consolidation in the sector and
    more foreign coming and investing
    Remarkable because it involves warring tribes
    making peace as is the first acquisition by a
    proprietary pharmacompany of a generic
    company in India
    The Scene

    The Singh's of Ranbaxy had held a 35% stake in


    Ranbaxy Laboratories Limited for 50 years
    Daiichi has agreed to:
    acquire the Singh’s 35% stake
    subscribe for 46 million new shares
    subscribe for 24 million new warrants
    make an open offer to purchase 20% of the
    remaining shares of the 65% minority
    shareholders
    The Scene

    Daiichi paid Rs 737 per share


    Daiichi subscribed Rs 737 for new shares and
    warrants
    Price represents a 53.5% to Ranbaxy’s average
    daily closing price on India’s NSE for the three
    months ending
    Price represents a 31.4% premium to share price
    immediately prior to announcement of the deal
    Malvinder Singh will stay on board of Ranbaxy
    The Scene
    The acquisition will cost Daiichi up to USD4.6
    billion
    Ranbaxy will be valued at USD8.5 billion
    Singh agreed to sell on market (which avoids
    14% CGT in India) but Indian law only allows
    block trades at a price that is 1% more or below
    the previous day’s closing price.
    Thus the trading price needs to get to RS729
    before deal can be done on market
    Pfizer counter offer
    Under Indian law, Pfizer (for instance) has 21
    days to launch a counter offer
    Pfizer is currently litigating against Ranbaxy in
    18 jurisdictions and this could be a brilliant
    commercial development for Pfizer
    On 18 June, 2008 Pfizer and Ranbaxy settled one
    such litigation (Lipitor)
    What's there for
    Shareholder
    Massive dilution for existing shareholders
    Massive influx of cash (via new subscription)
    Improves the Ranbaxy balance sheet as it will use
    the cash to pay down debt
    Gives the Ranbaxy board surplus cash to use for
    organic growth opportunities or acquisitions
    Allowed shareholders the chance to cash out 20% of
    their Ranbaxy holdings at the same 30% premium
    Opportunity to stay around and obtain post
    integration benefits
    Why Singh Did it
    A very “intelligent” deal
    Had held shares for 50 years
    But – the Ranbaxy growth curve had peaked
    2006 – 16% growth
    2007 – 7% growth
    2008 – 9% growth forecast
    Business model was struggling with high litigation
    costs and devaluation of the rupee against the USD
    US strategy was looking in the face of more
    expensive litigation
    Selling entire stake at a 30% premium represents
    excellent timing
    Why Sankyo did it
    Japan has an ageing population and they needed
    new market
    There is a growing recognition in Japan of the
    importance of generic drugs
    Japanese Health Ministry is encouraging doctors to
    use generic drugs to ease the health budget
    Non proprietary drugs will help to ease health costs
    as time goes on
    Suggestion is that generic drugs will represent 30%
    of total medicine market in Japan by 2012
    Daiichi were behind the game and needed to resort
    to acquisitions to catapult them ahead
    Acquisition of Ranbaxy gives Daiichi a low cost
    manufacturing base in India
    Why Sankyo did it
    Presumably, Daiichi will call upon Ranbaxy’s talent pool
    to help with origination and new research and
    development initiatives
    The deal represents a new interest by Japanese
    businesses in pharma sector in India
    Previously, the Japanese invested in auto, auto ancillary
    and consumer electronics
    Deal represents 2 times the total FDI in India from Japan
    over the last 8 years
    Daiichi will now have a strong generics operation in
    India and operations in 60 different countries
    Daiichi moves from No 22 to No 15 in the world’s largest
    pharma companies
    Analysis

    Rather than keeping it in the family, Indian


    promoters may look selling as more profitable
    Founders and promoters will diversify into new
    sectors such as financial services, banking, private
    equity, hedge funds like Malvinder did
    Signifies a deepening integration between India and
    the world economy
    Relaxation of FDI in India will continue and more
    acquisitions will occur
    We may see more foreign company acquiring
    Indian company for huge premium
    THANK YOU

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