RANBAXY DAIICHI SANKYO

COMPANY 1 I

NAME OF PRESENTER

Group Member
Sr.No.
1. 2. 3.

Name
Priyanka Fernandes Saurabh hanswal Arvind Vishwakarma

Roll No
15 18 56

COMPANY 2 I

NAME OF PRESENTER

Ranbaxy Laboratories Limited

Ranbaxy Laboratories Limited is an Indian Multinational Pharmaceutical Company.

Ranbaxy was started by Ranbir Singh and Gurbax Singh in 1937 as a distributor for a Japanese company Shionogi.
The Name Ranbaxy Become

Ranbir + Gurbax = Ranbaxy

Mohan Singh bought the company in 1952 from his cousins Ranbir and Gurbax. The Company was Incorporated on 16th June, 1961 at Delhi. The Company Manufacture drugs, medicines, cosmetics and chemical products. The company also markets a wide range of products including a number of life saving antibiotics. In October 1973 Ranbaxy Become a public limited company with the public issue of shares 63535 Equity Share of Rs 10 each at par to public.
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Conti
Ranbaxy is a member of the Daiichi Sankyo Group. Daiichi Sankyo is a leading global pharma innovator, headquartered in Tokyo, Japan.

Chairman : Dr Tsutomu Une

CEO & MD : Arun Sawhney Headquarters : Gurgoan Employees : More than 14600 Global Presence: Ground operations in 43 countries, products sold in over 150 countries , 8th in largest in the global general pharmaceuticals Manufacturing: 16 manufacturing facilities spread across 8 countries

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Daiichi Sankyo Limited

Daiichi Sankyo Company , Ltd was established in 2005 though the merger of two leading Japanese Pharmaceutical Companies. Daiichi Sankyo Company, Limited is a global pharmaceutical Company and the second largest pharmaceutical company in Japan. Provide innovative products and services in more than 50 countries around the world. With more than 100 years of scientific expertise.

Daiichi Sankyo is based in Tokyo and today has 50 billion yen in capital.
22nd Largest in the world Producer of high quality drugs Chairman - Takashi Shoda Employee More than 30000
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What was the motive of the Deal

Presence in emerging markets for Daiichi-Sankyo (Geographical diversification). Entry into non-proprietary drugs for Daiichi-Sankyo (Product Extension). To

develop new drugs to fill the gaps and take advantage of Ranbaxys strong
areas. Realization of sustainable growth through a complementary business model. To overcome its current challenges in cost structure and supply chain. Acceleration of innovation drug creation by optimizing value chain efficiency. The acquisition of Ranbaxy by Daiichi represents a major entry for the Japanese firm into the high growth business areas of generic drug. The acquisition

shows that global pharma companies are making efforts to cope up with strong
generic drug makers. To match the competitor's strategy.
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Involved Parties
Daiichi-Sankyo

Nomura Securities Co., Ltd., the Japan headquartered investment bank, acted as the exclusive financial advisor Jones Day as the legal advisor outside India P&A Law Offices as the legal advisor in India Mehta Partners LLC as the strategic business advisor and Ernst & Young as the accounting and tax advisor

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Conti
Ranbaxy Co Ltd

Religare Capital Markets Limited, a wholly owned subsidiary of Religare Enterprises Limited, is the exclusive financial advisor to Ranbaxy and the Singh family. Vaish Associates are the legal advisors to Ranbaxy and the Singh family

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Reason for Acquisition

Daiichi Sankyo , Second Largest and an innovator company in Japan wanted to manufacture low cost generics because of Japan Governments new policy of helping the aging population by low cost generic Substitution for branded drugs. Daiichi lack in low-cost expertise and looking for low cost Generics Company. Daiichi Sankyo and Ranbaxy believe this transaction provides the significant long term value for all stakeholder though:
A Complementary business Combination i.e. Hybrid business model simple Daiichi Sankyo in Proprietary drugs and Ranbaxy in Non- Proprietary drugs. An Expand Global Reach Strong Growth potential

Cost competitiveness by optimizing usage of R&D and manufacturing facilities.

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Conti.
Mr Malvinder Singh Say There was no misleading information. Daiichi came and approached us. There were a bunch of people who wanted to engage with Ranbaxy. When they came, US FDA investigations were on. The R&D pipeline was not delivering enough products, the generic market was not generating adequate returns. Ranbaxy had three choice It Could have spend lots of money in acquiring a big generic company to grow inorganically. Merge with a global Player Sell out The Sell out option was the most profitable, both for the promoter as well as shareholder Daiichi Sankyo is a leading, Research based pharmaceutical company and this deal would enable Ranbaxy to explore their shared capabilities in drug development.
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Effect on stock Market

The Share Price of Ranbaxy Jump 6.12% From 528.40 to 560.75 on 9 June 2008, two day before the company announced its Buyout by Daiichi Sankyo.
The Benchmark Sensex down 506 points on same day

June 10 2008 , a day before the deal was announced, the Ranbaxy flat at Rs 560.80 and Sensex fell 177 points.

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Structure and Calculations of Deal

Assets and Liabilities Value attributed (Rs Crores) 3470 88 440 260

Book value of assets and liabilities (Cash, Inventory etc.)

Inventories (Increase in inventories to fair value) Tangible assets (Land) Intangible assets (Leasehold land) Intangible assets (Increase in current products, etc. to fair value) In-process R&D expenses Deferred tax liability Minority Interests

1805
304 -881 -1981

Goodwill
Total consideration
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17995 USD 4.01 Billion 21500 USD 4.5 Billion

NAME OF PRESENTER

Conti.
Size of the deal: US$ 4.5 Billion As per the deal, total value of Ranbaxy was US $ 8.5 Billion.
Exchange Rate are as follow Current Price (Rs) 2008 Deal Price (Rs) 2008 Premium 561 737 ($17) Per share ($1 = Rs 43.35) 176 Per Share , 31%

Daiichi Stake Promoters Stake

New Issue to Daiichi Open Offer to expanded capital Warrants Total Shareholding % Stake
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Shares (Million) 130

46 85 23.8 285 59%
NAME OF PRESENTER

Conti
Date of Acquisition 15 Oct,2008 Particular No. of Share % of Share Holding 20 Value (in Crore) 6727

Acquisition of share under open offer pursuant to Regulation 10 %12 of SEBI Regulation,1997 @ 737 per share Acquire Share by Preferential allotment of warrants @ Rs 737 per Share Acquisition of share from the promoter of the company @ Rs 737 per share

9,12,77,598

20 Oct,2008

4,16,22,585

9.12

3068

20 Oct,2008

9,35,13,899

20.49

6892

07 Nov, 2008

Acquisition of share from the then Promoter of the company @ Rs.737 per share
Total

6,53,09,121

14.31

4813

29,17,23,203
USD 4.5 Billion

63.92

21500

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Nature of Transaction
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. All cash transaction. Specific nature of the transaction Off Market Transaction Acquisition funded through debt and existing cash reserves. The deal was financed through a mix of bank debt facilities and existing cash resources of Daiichi Sankyo.

Daiichi-Sankyo has taken short and long term loans of USD 2.6 billion which is almost 50% of the total funding requirement of the deal.

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Pre Acquisition Shareholdings Patterns

Shareholding %
Singh Singh's Family Mutual Fund

Bank
General Public

Insurance Company

FII

12%

20.4%

34.8%

12.42% 12.43%

14.39% 5.56%
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Post Acquisition Shareholdings Patterns

General Public, 19.53 FII, 4.41 Insurance Company, 9.19 Daiichi Sankyo, 63.92

Bank, 0.37 Mutual Fund, 2.58

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Anticipated Benefits of the Acquisition

15th Largest drug maker in the world
Market Capitalization 30 Billion Low cost production On the financial side, the debt goes to zero, Rs 3,000 crore of cash comes in, the market capitalization goes to $8billion, the net worth goes up

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Conti
Daiichi-Sankyo Strengthen the position of the company. Acquisition will provide low cost manufacturing. Market access to over 60 countries . Ranbaxy Co Ltd
Company will become one of the top 5 in generic business.

Access to Daiichis advanced R & D facilities. Access to Japanese drug market Infusion of an additional $ 1 billion into the company. Surplus cash of Rs.3,000 crores flows in. The market capitalization goes to $8billion & the net worth goes up.

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The Deal is Beneficiary for both the side

A win-win for Ranbaxy and Daiichi Sankyo. Competitiveness by optimizing usage of R&D Manufacturing facilities of both Companies The Combination of the companies will give Ranbaxy access to Daiichis expertise in Research while the Japanese company will benefit from low-cost production on the sub-continent, a deepening profits crises in Japans drugs industry Daiichi Sankyo will gain position of major player in Generics.

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Performance and Problem of Ranbaxy After Acquisition

after the deal was inked, in September 2008, the US drug regulator FDA accused Ranbaxy of misrepresenting data and manufacturing deficiencies. It issued an import ban on Ranbaxy, prohibiting the export of 30 drugs to the US, within three months after Daiichi announced the acquisition. Following this, Ranbaxys sales in the US shrank almost by a fourth, and its stock price slumped to over a fifth of the acquisition price. It has since taken Ranbaxy four years to reach a settlement with the US regulatory authorities. The company recently agreed to pay a fine of $500 million after admitting to false representation of data and quality issues at its three Indian plants supplying to the US market. The companys problems in the US are far from done with. It continues to face challenges in securing timely approval for its exclusive products in the US markets.
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Last Six Year Performance of Ranbaxy In Stock market

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Financial Performance
12000 10000 8000 6000 4000 2000 0 Net Worth Total Debt Net Current Assets Balance Sheet
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2008 4296.25 4311.44 3171.29 8675.14

2009 4343.39 3629.52 2371.94 8026.25

2010 5604.73 4334.81 4576.11 10004.25

2011 2869.39 4490.73 2220.07 7441.08

2012 4084.33 4846.19 3724.85 9019.47

NAME OF PRESENTER

Acquisition
A corporate action in which a company buys most, if not all, of the target company's ownership stakes in order to assume control of the target firm. Acquisitions can be either friendly or hostile. Friendly acquisitions occur when the target firm expresses its agreement to be acquired, whereas hostile acquisitions don't have the same agreement from the target firm and the acquiring firm needs to actively purchase large stakes of the target company in order to have a majority stake. In either case, the acquiring company often offers a premium on the market price of the target company's shares in order to entice shareholders to sell. For example, ABC to acquire XYZ was equal to a 65% premium over the stock's market price.

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Thank You

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