Twitter
Advertisement

Ranbaxy fades into sunset

Sun Pharma to focus on integration, open to more acquisitions

Latest News
article-main
Dilip Shanghvi, MD, Sun Pharma, addressing a press meet to announce Ranbaxy merger on Wednesday
FacebookTwitterWhatsappLinkedin

Sun Pharmaceuticals on Wednesday announced completion of merger of Ranbaxy Laboratories with itself, drawing curtains on the company which was in existence since mid of the last century.

Sun said the integration will be the immediate challenge post merger.Dilip Shanghvi, managing director, Sun Pharma, told reporters, “This would be the most complex merger and integration process that we would have seen in India. Our focus would be to find a way to integrate both the busineses where we can retain value and talents in the business.”

The company is also planning to scale up its investment on research and development to over $300 million and expects the combined entity will be able to invest about $500 million on research in a year.

Israel Makov, chairman, Sun Pharma, said through videoconferencing, “The immediate challenge though is integration. This is the largest and most complex integration that Sun Pharma is taking so far.”

The combined entity would be the fifth largest generic player globally with a presence in 150 countries and a turnover of about $5.14 billion. Post-merger, Ranbaxy's earlier promoter Daiichi Sankyo would become the second largest shareholder in Sun Pharma with around 9% stake and the Shanghvi family will hold about 55%.

Post integration, the company will develop a significant presence in the consumer health business, said Shanghvi. “It will be an important new engine of growth for the company.” In April last year, Sun Pharma announced its intent to buy Gurgaon-based Ranbaxy from Daiichi Sankyo in an all-stock deal at an enterprise value of $4 billion based on the share price then. However, the share price of both firms have gone up in the past one year. Based on the agreed share swap ratio and current share price, the equity value of the deal stands at over $5.5 billion. Ranbaxy has a debt of about $1 billion on its books.

The company is also looking at increasing its R&D spends. “We are looking to increase our R&D spend in excess of $300 million. We are looking at a situation where, as we continue to grow the business, we focus on investing up to 6-7% of turnover, which would allow us to invest close to $500 million in a year on research,” Shanghvi said.

On retaining talent, Shanghvi said that some of the top managers of Ranbaxy (including Ranbaxy chief Arun Sawhney) are yet to find role in the combined entity. Shanghvi also said there has been no restructuring and the company is looking at ways to utilise all talents in the company.

Sun is also estimating $250 million synergies over the next three years. Shanghvi said that this acquisition will not restrict the company from making any other acquisitions in future. “This acquisition does not preclude us from doing other acquisitions,” he said. Referring to Ranbaxy’s regulatory hurdles in the US, with four of its plants under the US import ban, Shanghvi said the focus will be to win confidence of the regulators. The loss of confidence had caused Ranbaxy to go under the consent decree, he said. “We will do whatever it takes to win back the confidence of the regulator,” he said.

Meanwhile, Sun Pharma has fixed April 7 as the record date in order to determine the names of the shareholders of Ranbaxy who would be entitled to receive 8 equity shares of Re 1 each of the company for every 10 equity shares of Rs 5 each of Ranbaxy held and to determine the names of the NCD holders who would be entitled to 1 NCD of Rs 1 lakh each of the company for every 1 NCD of Rs 1 lakh each held in Ranbaxy pursuant to amalgamation of Ranbaxy into the company.

Find your daily dose of news & explainers in your WhatsApp. Stay updated, Stay informed-  Follow DNA on WhatsApp.
Advertisement

Live tv

Advertisement
Advertisement