Strategic Rationale for Acq

Presence in emerging markets for Daiichi-Sankyo (Geographical diversification). Entry into non-proprietary drugs for Daiichi-Sankyo (Product Extension). To develop new drugs to fill the gaps and take advantage of Ranbaxys strong areas. Realization of sustainable growth through a complementary business model. To overcome its current challenges in cost structure and supply chain. Acceleration of innovation drug creation by optimizing value chain efficiency. The acquisition of Ranbaxy by Daiichi represents a major entry for the Japanese firm into the high growth business areas of generic drug. The acquisition shows that global pharma companies are making efforts to cope up with strong generic drug makers.

The Daiichi Sankyo Ranbaxy Fit

Synergies
Considering that Ranbaxy is a generics company and Daiichi Sankyo an innovator company, both the businesses complement each other with negligible overlap.(Daiichi will support Ranbaxy's R&D efforts and contract research business) Ranbaxy provides a low cost manufacturing set-up to Daiichi Sankyo. Ranbaxy geographically diversified presence across the globe will enable it to provide a wider reach to Daiichi Sankyo' product portfolio, including India. Ranbaxy has a small presence in the Japanese market where the generics market holds good opportunities. Ranbaxy incurred lower interest costs, as it became debt-free company. The deal strengthened the financials of Ranbaxy (making it debt free and cash rich) and help it grow aggressively -organic. Ranbaxy bypassed a lot of European and U.S. companies that were finding it difficult to enter the Japanese market, where safety and testing requirements are a lot higher.

Nature of transaction
All cash transaction. Specific nature of the transaction Off Market Transaction Acquisition funded through debt and existing cash reserves. The deal was financed through a mix of bank debt facilities and

existing cash resources of Daiichi Sankyo.

Daiichi-Sankyo has taken short and long term loans of USD 2.6 billion which is almost 50% of the total funding requirement of

the deal.

The Deal

The Deal
Nature of Transaction Open Market Share Purchase Share Purchases from founding family Share Purchases by issue of new Share Acquisition Consideration (in Crores)
7458 10169 3742

Direct acquisition related expenditures

TOTAL Rs 21,500 Crores (USD 4.9 Billion)

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