"Daiichi to increase Ranbaxy stake by 20%"

Japanese Co To Make Open Offer On Aug 8; Pfizer Rumoured To Be Making Counter-Offer For 65% Non-Promoter Stake

JAPANESE company Daiichi Sankyo on Monday announced that it will make an open offer to buy 20% stake (92 million shares) in Ranbaxy Laboratories. The offer opens on August 8 and will close on August 27. The last day for submitting a competing bid is July 7. There is unconfirmed speculation that US major Pfizer is exploring the possibility of making a counter-offer to buy the 65% non-promoter stake in the company.

Last week, the promoters of Ranbaxy Laboratories announced that they have agreed to sell their entire 34.82% or 129.9 million shares in Ranbaxy for Rs 737 per share or around Rs 10,000 crore to Daiichi.

Daiichi will pick up 9.5% in the company through a preferential allotment of shares up to 9.5% and will have the option of acquiring another 4.9% through the issue of warrants. If the open offer is fully subscribed then on a fully diluted basis, Daiichi will own 58% of the company. An EGM of the company has been called on July 15 to approve the preferential issue of shares and warrants. According to the Indian laws, the Japanese company will have to make an open offer of another 20% stake at a price not less than Rs 737. However, all minority shareholders may not be able to sell all their shares. If the number of minority shareholders who want to subscribe to the open offer cross 20%, then Daiichi Sankyo will buy their stake proportionately to their shareholding in the company’s remaining 65% stake.

Ranbaxy promoters have entered into a non-compete clause with Daiichi for which they will not receive any additional compensation. After the completion of the transaction ,the Ranbaxy board will be reconstituted. It will comprise of four nominees from the Singh family and six from Daiichi. The two sides will select their independent directors, putting a question mark on the independence of these independent directors. Daiichi Sankyo has appointed ICICI Securities as the manager of the offer.