Cabinet gives nod for Daiichi's purchase of Ranbaxy

NEW DELHI: India has approved Japanese drug maker Daiichi Sankyo's buying over of Indian drug major Ranbaxy, Finance Minister P. Chidambarum announced on Friday.

"The total flow of foreign direct investment as a result of the acquisition of shares is estimated at Rs.215.6 billion (about $4.8 billion)," Chidambaram said. (The deal has been calculated at Rs.45 to a dollar).

Daiichi Sankyo has been waiting for the approval from Indian regulators to complete its purchase of a controlling stake in Ranbaxy Laboratories, India's largest pharmaceutical company, after announcing it has completed its tender offer for Ranbaxy shares.

Any foreign takeover, worth more than Rs.6 billion, of an Indian company requires a cabinet review.

Japan's leading drugmaker has offered to acquire 34.8 percent stake of Ranbaxy from chief executive officer Malvinder Singh and his family and up to 12.2 percent in new shares for $1 billion.

This would give the Tokyo-based Daiichi Sankyo as much as a 67 percent stake, including its completion of a public tender offers for 20 percent of shares.

Ranbaxy shareholders accepted an offer from Daiichi to buy more than the 92.5 million shares on the open market for about Rs.68.2 billion.

After the cabinet approval, Daiichi also needs approval from the Reserve Bank of India, the nation's central bank.