Japanese drug major Daiichi Sankyo, which owns 63.9 per cent in India’s largest pharmaceutical company, Ranbaxy, has failed to convert the warrants issued by the latter into shares during the stipulated 18-month period.
Daiichi has forfeited the Rs 175.7 crore it had paid as 10 per cent of the conversion price (at Rs 737 per share) of 23,834,333 warrants. Analysts said the decision was expected, as Ranbaxy’s shares were trading 40 per cent lower than the price at which it had agreed to convert the warrants into shares.
“The decision is purely financial. Daiichi would have had to pay over Rs 1,580 crore to convert the warrants into shares. Since the company already has a majority stake in Ranbaxy, this would not have made much sense,” said Ranjit Kapadia of HDFC Securities.
The issue of warrants on a preferential basis was part of the deal which saw Ranbaxy becoming a Daiichi subsidiary through purchase of the entire promoter stake in 2008. Daiichi was offered the warrants in October 2008.
The Ranbaxy share price closed 0.6 per cent down at Rs 443.35 on the Bombay Stock Exchange today.