The Daiichi-Ranbaxy deal has the bucked the trend of Indian buyers snapping up foreign targets. Raghavendra Verma investigates the intricacies of the transaction and examines the legal hurdles that faced both companies and their lawyers
Following a year in which India Inc has grabbed the international headlines with a series of prominent outbound acquisitions, the recent sale of home-grown pharmaceuticals giant Ranbaxy to Japan’s Daiichi Sankyo for US$4.6 billion has caught many observers by surprise.
According to The Economic Times, every person who met Ranbaxy’s managing director and CEO, Malvinder Singh, on the day the deal was announced had the same question on their lips: “Why are you selling out?’’
From Ranbaxy’s perspective, there are compelling justifications for the sale. “It is a win-win situation,” says Martand Singh of Vaish Associates, the Delhi-based law firm that advised the Ranbaxy and its owners. “It is not so that Indian companies will always buy [foreign companies]. One has to take it in one’s stride that Indian promoters will also sometimes sell,” he adds.
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As India Business Law Journal was going to press, another potential obstacle arose in the US in the form of allegations of fraudulent data provided to regulators. Ranbaxy has denied any wrongdoing and the threat appears neither imminent nor potentially deal-breaking.
