It’s the biggest acquisition of a listed company in India. Japanese pharma major Daiichi Sankyo will acquire a majority (50.1%) stake in the country’s largest drug manufacturer, Ranbaxy, at a cost of anywhere between $3.4 billion (Rs 14,620 crore) and $ 4.6 billion (Rs 19,780 crore).
Besides giving Daiichi a controlling stake in Ranbaxy, the deal will also enable it to acquire a majority stake in Zenotech, another Indian pharma company. It will also get around 14.9% equity each in Jupiter Bioscience, Kribs Biochemical and Orchid Pharma, as Ranbaxy holds stakes in each of these companies.
The promoters of the company, Malvinder Singh and his family, will sell their entire stake, which is at present 34.82% of the paid up capital, to the Japanese company for Rs 10,000 crore. When it is finally closed, the transaction would value Ranbaxy at $8.5 billion. The market capitalisation of the Japanese company is around $20 billion.
Singh said that following the conversion of Foreign Currency Convertible Bonds (FCCB) issued to finance companies earlier, the promoters’ holding would come down to 28%. Company has issued a large number of FCCBs, which when converted into shares, will increase paid up capital substantially.
Besides buying out the promoters’ holding, the Japanese company will be allotted 4.63 crore fresh shares on preferential basis at Rs 737 per share. Daiichi Sankyo will also be allotted 2.39 crore convertible warrants. Each warrant can be optionally converted into an equity share of the company within six to 18 months of the date of issue of the warrant. While the shares issued on preference basis will be around 9.5% of the paid up capital, the warrants, if fully converted into shares, will constitute about 4.5% of the paid up capital.
All this will take Daiichi Sankyo’s holding in Ranbaxy to around 38% of the paid up capital. Once its holding crosses 15%, it will have to make an open offer to acquire up to an additional 20% in the company. The open offer too will be made at Rs 737 per share.
If Daiichi mops up the entire 20%, its stake in Ranbaxy will rise well beyond the agreed level of 50.1%. In that case, the conversion of warrants into shares will not be done to keep the holding at 50.1%, said Daiichi Sankyo president and CEO Takashi Shoda. The entire deal will be completed by March 2009. As Ranbaxy is holding a 48% stake in Zenotech, Daiichi will have to make an open offer for Zenotech also. Share price of Zenotech rose by 19% to Rs 113 per share on Wednesday following the announcement. Daiichi will have to make an offer to acquire around 6.4 crore shares.
Singh said the deal would lead to an inflow of $1 billion in Ranbaxy, which would be used to retire the company’s debt.
Shakti
No comments:
Post a Comment