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US justice dept withdraws motion against Ranbaxy
 
 
  9 Oct, 2008, 0118 hrs IST, ET Bureau
 
http://economictimes.indiatimes.com
 
NEW DELHI: The US Department of Justice (DoJ) has withdrawn its motion in a local court against Ranbaxy after the Indian drug maker handed over the documents sought by the authorities. ET was the first to report, in its October 2 edition, that DoJ will withdraw the motion this week.
 
DoJ had sought a week?s extension to confirm whether the documents given by Ranbaxy were complete before withdrawing the motion. In a filing to the district court of Maryland (US), DoJ said, "The US hereby withdraws the motion to enforce subpoenas filed on July 3, 2008. Ranbaxy and PAREXEL Consulting have substantially produced all the documents that were at issue and agreed to promptly replace any produced documents that are hereafter determined to be illegible or poor in quality." The news had a positive impact on the shares of Ranbaxy, which surged 9.08% to Rs 279.25 at the Bombay Stock Exchange (BSE) on Wednesday.
 
DoJ said it will reopen the case if Ranbaxy is found to withheld any responsive or non-privileged documents. The pharma company has agreed to produce documents that are discovered after the withdrawal of the motion .
 
The move provides legal relief, but does not signal the end of Ranbaxy?s troubles. The US authorities will continue with their investigations against the company for allegedly falsifying data to manufacture and sell adulterated drugs manufactured at its two India-based plants. Ranbaxy has strongly denied these allegations. Tightening its scrutiny against the company, the FDA recently banned the import of 30 drugs manufactured at the company?s two plants, while admitting that it did not have any evidence that the drugs were sub-standard. The US government also stopped sourcing three HIV drugs from the Indian drugmaker for its anti-AIDS drugs programme. Separately, a US congressional committee has pulled up the FDA for being lax in investigating the drug major.
 
Ranbaxy reiterated that it was confident about coming clean in the investigations. "The US DoJ has now been provided with a comprehensive set of audit documents based on instructions by Ranbaxy Laboratories, which will help resolve the questions raised by the US government about the company?s business practices and standards. Ranbaxy remains confident that its pharmaceutical products are safe and effective and remains committed to cooperatively working with all regulatory and legislative authorities," the company said in a statement reacting to the withdrawal of the motion.
 
The US is Ranbaxy?s single largest market, accounting for about a quarter of its $1.6 billion sales last year.
 
Following FDA?s action, the health regulators of other European countries have decided to independently review the company?s drugs manufactured in India. Analysts say DoJ?s move is expected to have a positive impact on the image of Ranbaxy globally.
 
Meanwhile, Daiichi Sankyo, which is in the process of buying Ranbaxy, said the acquisition remains on track although the company?s share price has fallen to one-third of the June 11 offer. "The price of Rs 737 is fixed. If the share price of Ranbaxy continues to move this way, we will follow accounting standards and consult our accountants to determine the valuation losses", agencies quoted Daiichi Sankyo CEO Takashi Shoda as saying. "Of course, we were aware of the issue and included it in the due diligence process. But we thought that Ranbaxy could handle the issue before receiving the FDA?s warning letter," he added.
 

Daiichi Sankyo on course to complete Ranbaxy buy 11 Oct, 2008, 0002 hrs IST,Khomba Singh, ET Bureau
 
NEW DELHI: Daiichi Sankyo is all set to close the $4.6-bn acquisition of the country?s largest drugmaker Ranbaxy Laboratories. Payment to shareholders, who sold the company?s shares to Daiichi through its open offer, is expected to begin on Tuesday.
 
This will be followed by the promoters selling their 34.8% stake to the Japanese company. The final step in the transaction will be Daiichi Sankyo?s subscription of preferential shares and warrants.
 
The Reserve Bank earlier this week gave permission to Daiichi Sankyo to bring money into the country and it is learnt that the process of fund transfer into India has already begun.
 
Ranbaxy shares rose 4.7% to Rs 293.25 on BSE on Friday even as the Sensex fell 800 points. Following the company?s troubles in the US, there was speculation that Daiichi Sankyo might withdraw or renegotiate the price of the takeover.
 
However, Daiichi Sankyo CEO Takashi Shoda on Thursday said the share price agreement of Rs 737 per share was fixed and the company was going ahead with the transaction.
 
While a CLSA report says that the acquisition of the promoters? stake is expected to take place towards November end, sources say Ranbaxy promoters may sell their stake in the next few weeks.
 
The June 11 deal allows promoters to complete the transaction till March 2009. But with the markets crashing and constant flow of bad news from the US it is expected that promoters would want to offload their shares at the earliest.
 
Last week, the government had cleared the deal and RBI?s approval was the last regulatory process for the Japanese company to complete the takeover.
 
In June, Daiichi Sankyo had agreed to acquire the promoters? entire 34.8% stake in Ranbaxy at Rs 737 per share, a 31.4% premium over the then share price of Ranbaxy. Daiichi Sankyo subsequently made the mandatory open offer to acquire 9.25 crore or 20% stake in the company at Rs 737 each.
 
Ranbaxy has also agreed to issue preferential allotment and warrants amounting to 9.5% and 4.9% stake, respectively, to the Japanese company.
 
Last month, ICICI Securities, the manager for the mandatory 20% share buyback from public shareholders, had informed BSE that its open offer for 20% stake has been over subscribed.
 
However, it was delaying the payment to shareholders as it was yet to get regulatory nod. Daiichi Sankyo will also pay interest to shareholders for procedural delays.
 
 
 
 
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