The Acquisition of Ranbaxy

Published by admin on June 19th, 2008 | Tagged Business, News, Strategic Management

We often witness how the big Indian Companies acquire foreign firms; we hardly get to see the opposite.That is why I was surprised when I got to know that a Japanese company, Daiichi Sankyo, will acquire a controlling stake in Ranbaxy.

The promoters, Malvinder Singh and family will sell their entire stake of 34.82 per cent to Daiichi Sankyo for $2.4 billion or around Rs 10000 crore.The deal values Ranbaxy at $8.5 billion.Daiichi Sankyo will acquire 51 per cent to 62 per cent of Ranbaxy.The total value of the deal will lie somewhere between $3.4 billion to $4.6 billion.

What will Rs 10000 crore be used for ? They will use it for their business of financial services and health-care.

Malvinder Singh will however, continue to be the CEO and MD of Ranbaxy.He will also become the Chairman of the board after the deal.

Ranbaxy is the largest pharmaceutical Company in India. Ranbaxy was started by Ranjit Singh and Gurbax Singh.The Company began its operations as a distributer for a Japanese Company.The word Ranbaxy is derived from the names of Ranjit Singh and Gubax Singh. Bhai Mohan Singh, Grandfather of Malvinder Singh , bought the company from them in the1950s.Ranbaxy went public in the year 1973.

How will this deal help?

• This will get Daiichi Sankyo-Ranbaxy into the category of the top 15 pharma companies in the world
• They will be able to offer better products
• This will make best use of the strong Research & Development capabilities of both firms
• Ranbaxy will be free from $ 500 debt
• The inflow of funds will help Ranbaxy with growth and expansion
• Both the companies will be able to explore new markets

Well, I guess the owners know what is best for the company and its shareholders.They must have taken an accurate decision keeping in mind all the important factors. Malvinder Singh called this a strategic deal and not a sell-out.

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