Will Sun rise again?

Can Sun Pharma’s Dilip Shanghvi work his merger magic on Ranbaxy?

Anyone monitoring Ranbaxy’s shareholding pattern in December 2013 would have noticed a new entrant by the name of Silverstreet Developers with a 1.41% stake in the Daiichi Sankyo subsidiary. By March, the same entity had further raised its stake to 1.64%. Though not a significant jump, discerning investors would have known that something was up.

Soon enough they got to know exactly what was cooking. On April 7, Dilip Shanghvi’s Sun Pharmaceuticals made a 5 am announcement of its acquisition of one of India’s leading generic drugs companies that had fallen from grace, following trouble with US regulatory authorities over manufacturing quality lapses. As for Silverstreet — no prizes for guessing — one of its partners was Sudhir Valia, none other than the executive director of Sun Pharma and Shanghvi’s brother-in-law. Whether that would qualify as insider trading or not is something Sebi will probably investigate in due course. But what was Shanghvi thinking while signing the deal?

“Size does not excite us. The quality of business and the ability to manage it and grow faster than competition is what excites us,” Shanghvi declared in a concall following the announcement of the $3.2 billion, all- stock deal. That interest finally started taking shape in the past three or four weeks when Japan’s Daiichi Sankyo, Ranbaxy’s largest shareholder, and Sun Pharma agreed on the larger details of the deal. With the result that Sunday, April 6, proved to be busier than a regular work day for board members of Daiichi Sankyo, Ranbaxy and Sun Pharma as they simultaneously held day long meetings in Tokyo, New Delhi and Mumbai to seal the biggest merger in Indian pharma industry.

High five

The deal will create the world’s fifth-largest generics pharma company

Given the mount


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