Daiichi Sankyo buys majority stake in Ranbaxy for $4.6B

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Daiichi enters generic market with Ranbaxy purchase. Source: Lance
and Brad

Daiichi Sankyo has acquired a majority stake in Ranbaxy, India's largest drug manufacturer and one of the top ten generic pharmaceutical companies in the world, in a transaction that will be worth up to $4.6 billion.

The combination of the two companies will give the Haryana, India-based Ranbaxy access to Daiichi's expertise in research while the Japanese company will benefit from low-cost production on the sub-continent, amid a deepening profits’ crisis in Japan’s drugs industry, according to The Times.

Malvinder Singh will continue to lead Ranbaxy as its CEO and managing director, while additionally assuming the position of chairman of the board, upon closure, according to the Toyko-based Daiichi.

“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,” said Takashi Shoda, president and CEO of Daiichi.

The share purchase and share subscription agreement have been unanimously approved by the boards of directors of both companies.

Daiichi said it is expected to acquire the majority equity stake in Ranbaxy by a combination of purchase of shares held by the Sellers; preferential allotment of equity shares; an open offer to the public shareholders for 20 percent of Ranbaxy’s shares, as per Indian regulations; and Daiichi’s exercise of a portion or all of the share warrants to be issued on a preferential basis.

Under the terms of the deal, Ranbaxy will become a subsidiary of Daiichi. The Times reported that Daiichi is paying a 31 percent premium on Ranbaxy's closing price yesterday. The combined company will be worth about $30 billion.

The acquisition will give Daiichi access to generic drugs markets in 50 different countries, according to The Times.