In a move that will help Japanese drug-maker Daiichi increase its control over Ranbaxy Laboratories, Life Insurance Corporation of India (LIC) and General Insurance Corporation (GIC) – which between them hold 16.43 per cent in the country’s biggest pharmaceutical company – have offered to sell all their shares.
While LIC held a 15 per cent stake at the end of June this year, GIC’s share was estimated at 1.42 per cent. The shares were offered for sale at Rs 737, said sources close to the development.
Merrill Lynch sold its 3.17 per cent stake in Ranbaxy during the first quarter, while Deutsche Securities pared its holding from 3.17 per cent at the end of March to 1.78 per cent at the end of the June quarter. Ranbaxy shares rose from Rs 438.75 on March 31 to Rs 523.04 at the end of June. The company’s shares fell by 1.89 per cent to close at Rs 490.35 on the Bombay Stock Exchange today.
In June, Daiichi announced its decision to acquire a 34.8 per cent stake from the Singh family, the promoters of Ranbaxy. If Daiichi accepts the offer to buy LIC’s entire holding of 56 million shares, the life insurer will earn Rs 4,130.14 crore, while GIC will earn Rs 389.27 crore for its 5.28 million shares.
Daiichi Sankyo’s open offer (for additional stake in the Indian drug-maker), which opened on August 16 is scheduled to close on September 4.
In June this year, the Indian promoters of Ranbaxy, the Singh family, had agreed to divest their 34.8 per cent stake to Daiichi Sankyo. Daiichi has to acquire up to 92.1 million shares at Rs 737 each through the open offer.
Daiichi Sankyo will have to further acquire 9.5 per cent through a preferential allotment of equity shares and another 4.5 per cent through share warrants to be issued on a preferential basis (2.38 crore warrants exercisable between six and 18 months from the date of allotment, for one fully paid-up equity share of Rs 5 each at a price of Rs 737, being the price higher than that determined by the Sebi guidelines).
Following this, Daiichi Sankyo’s stake in Ranbaxy could go up to 58 per cent. The acquisition is one of the largest deals in the Indian pharmaceutical sector.