Daiichi-Ranbaxy FDI plan to be placed before CCEA

August 24, 2008	(Be the first to rate this story!)  Loading ...
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The Foreign Investment Promotion Board (FIPB) is planning to place Japanese drug maker Daiichi’s FDI proposal to acquire stake in Ranbaxy before the Cabinet Committee on Economic Affairs (CCEA), as the proposal exceeds Rs 600 crore and hence requires CCEA nod. The proposal is about Daiichi Sankyo acquiring additional 20 per cent stake in Ranbaxy Laboratories In June, the Japanese company had announced it would buy 34.81 per cent stake in Ranbaxy, held by the Singh family, and also acquire up to 9.21 crore shares at Rs 737 each through the open offer. Daiichi Sankyo would further acquire 9.5 per cent through preferential allotment of equity shares and another 4.5 per cent through share warrants to be issued on a preferential basis (2.38 crore warrants – exercisable between 6 and 18 months from the date of allotment, for one fully paid-up equity share of Rs 5 each at price of Rs 737, being the price higher than that determined by SEBI guidelines). Following this, Daiichi Sankyo’s stake in Ranbaxy could go up to 58 per cent. The entire deal is valued at $3.4 billion to $4.6 billion.

As per the Foreign Direct Investment policy, as the proposal attracts Press Note 1 (2005 series) and also issue of warrants, it required the FIPB nod, sources said. The FIPB had accordingly considered the proposal on July 29 and also recommended it for an approval. However, sources pointed out that the given FDI inflow on warrants itself adds up to well over Rs 600 crore, the FIPB is slated to take it up again in its meeting on August 26, and recommend the proposal for a possible consideration by CCEA.

News Published Under:   Foreign Direct Investment in India |

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