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Daiichi to sell $3.6 billion Sun stake
Highlights
Japan’s Daiichi Sankyo Company Ltd is selling shares worth up to $3.6 billion in Sun Pharmaceutical Industries Ltd, setting it on course to retreat from India after a rollercoaster seven years. Daiichi bought Ranbaxy Laboratories in 2008, betting on growing global demand for generic drugs, but found itself saddled with a company battling complaints and sanctions from the US Food and Drug Administration (FDA).
Japan’s Daiichi Sankyo Company Ltd is selling shares worth up to $3.6 billion in Sun Pharmaceutical Industries Ltd, setting it on course to retreat from India after a rollercoaster seven years. Daiichi bought Ranbaxy Laboratories in 2008, betting on growing global demand for generic drugs, but found itself saddled with a company battling complaints and sanctions from the US Food and Drug Administration (FDA).
Mumbai-headquartered Sun Pharma, India’s largest drugmaker by sales, agreed to buy Ranbaxy from Daiichi for $3.2 billion in April 2014 . As part of that deal, Daiichi got a 8.9 per cent stake in the new Sun Pharma. Daiichi kickstarted the sale of the Sun Pharma stake on Monday, according to a person directly involved in the deal and a marketing term sheet, through accelerated book building.
The sale comes after Sun Pharma completed the acquisition of Ranbaxy last month. In an exchange filing, the Japanese drugmaker said its board had approved the sale of all or part of the Sun Pharma stake. It gave no reason for the sale, but added the existing business partnership with Sun Pharma would remain unchanged.
“From the perspective of the improvement of corporate value, Daiichi Sankyo has performed a review of the Sun Pharma shares and reached a conclusion to sell the shares entirely or partially,” it said. Daiichi said it would disclose the financial details related to the Sun Pharma stake sale when it announces results for the fiscal year that ended on March 31.
Daiichi’s decision to sell Ranbaxy last year came against the backdrop of a slew of sanctions imposed by the FDA on the company over concerns about manufacturing processes at its plants. At the time of the Ranbaxy sale to Sun Pharma, the value of the Japanese firm’s investments had halved since it bought control, as the regulatory problems had triggered a sharp fall in Ranbaxy’s share price.
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