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Daiichi to acquire major stake in Ranbxy

Tokyo, June 11: Japanese drug maker Daiichi Sankyo Co Ltd is all set to acquire a majority stake in India`s biggest drug maker Ranbaxy Laboratories Ltd, as the latter’s promoters, Malvinder Singh and Shivinder Singh, have agreed to exit the company and sell their entire 34.8 percent holding.

Daiichi is expected to make a mandatory open offer soon to buy an additional 20% stake in the company, as required by the Indian laws, and pay between USD 3.4 to 4.6 billion for the entire deal. Sources said Daiichi is planning to acquire a controlling 51% stake in the Indian firm.

Shares of Ranbaxy today surged over 5 percent on the Bombay Stock Exchange, while Daiichi Sankyo’s shares were up nearly 5 percent. In the early morning trade, the Ranbaxy scrip touched a 52-week high of Rs 592.70 as against yesterday`s close of Rs 560.75.

The friendly deal values Ranbaxy, one of India`s biggest firms, at Rs 737 per share and represents a 31.4 percent premium to Tuesday`s closing share price.

Under the deal, Daiichi Sankyo will buy the entire 34.8 percent controlling stake of Ranbaxy`s founders and also launch a bid to buy shares from the market.

The total transaction value is expected to be worth between USD 3.4 to 4.6 billion, the companies said in a statement. Daiichi has valued the Indian drug maker at USD 8.5 billion, reports suggested.

After the deal is completed, which is expected by next year, Ranbaxy will become a subsidiary of the Japanese drug maker.

"There`s a global move to generics and Japan`s a bit behind on this," Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management, said after reports of the deal.

"India is a large market but even more important is the fact that Ranbaxy operates in a number of other countries. That`s the real merit," he said.

Malvinder Singh, chief executive of Ranbaxy, will continue to lead the company as its CEO and managing director, while additionally assuming the position of chairman of the board, upon closure, Ranbaxy said.

Commenting on the deal, Singh said it puts Ranbaxy on a new and much stronger platform to harness its capabilities in drug development, manufacturing and global reach.

"Together with our pool of scientific, technical and managerial resources and talent, we would enter a new orbit to chart a higher trajectory of sustainable growth in the medium and long term in the developed and emerging markets organically and inorganically," he said.

Ranbaxy fairly priced at current levels, say analysts
11 Jun, 2008, 1735 hrs IST

MUMBAI: Ranbaxy Laboratories shares on Wednesday closed unchanged at Rs 560.80 on the BSE, despite Daiichi Sankyo announcing a buyout of the promoters’ stake in the company and open offer at Rs 737 per share.

The flat closing of the stock is explained by analysts saying it is fairly priced at these levels and there may be some upside left in the counter.

During the day, the stock rose to a high of Rs 592.70. The low was Rs 565.

Promoters Malvinder Singh and Shivinder Singh have sold their entire 34.8 per cent stake in Ranbaxy to the Japanese drug maker at Rs 737 per share, a premium of around 32 per cent to today’s close. The stock had already rallied around 20 per cent in the past one month on a stake sale buzz.

“Out of the 65.2 per cent holding in the market, 20 per cent will be accepted in the open offer. That is, for every three shares held, one will be tendered in the open offer,” said Ranjit Kapadia, head of research of private clients group--pharma and midcap at Prabhudas Lilladher.



Thus, for an investor who bought three shares of Ranbaxy at Rs 560 per share, the total purchase price would be Rs 1,680. Of this, only one share would be tendered at Rs 737 in the open offer. The remaining two would be at a cost Rs 943, or Rs 471 per share, to the investor.

“The stock is fairly priced at current levels. Investors will have to wait for the open offer to surrender the stock at Rs 737 per share,” Kapadia said.

Sarabjit Kour Nangra, vice president-research at Angel Broking, said, “Ranbaxy has run up a lot recently. We have a target price of Rs 603 on the stock and after taking into account the open offer price of Rs 737 per share, it still leave some upside in the counter.”

He went on to add, “The deal is a win-win situation for Ranbaxy and Daiichi, as the latter can leverage the low cost advantage offered by India complemented by the world-class infrastructure. In turn, Ranbaxy would benefit from the product pipeline of Daiichi.”

Prabhudas’ Kapadia acquiesced, “Ranbaxy will be part of a global group and amongst the top 15 pharma companies. It will be a hybrid model of innovator and generic company. The deal is 4.2 times CY07 sales and 20.4 times EBITDA, which is very good.”

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ADAG for Cr-action against RIL officials

New Delhi, June 18: Anil Ambani Group on Wednesday threatened to start criminal proceedings against RIL officials amidst the battle with Mukesh-led group on its ongoing talks for a deal with South African telecom giant MTN.

"We will start criminal proceedings against RIL officials -- Sandeep Tondon, L V Merchant, K Sethuraman and others -- in case the Mukesh Ambani-led company persisted with the `fraudulent` agreement of January 12, 2006 to assert its alleged right of first refusal," an RCOM official said.

When contacted, an RIL spokesperson declined to comment on the latest missive.

RIL had earlier threatened legal action against ADAG and MTN saying any violation of its first right of refusal by either would be dealt with legally and the company would also seek damages.

RIL had also earlier said that the agreement was very much in place and that ADAG had never challenged the validity of the same.

Earlier in the day, RCOM released excerpts of a letter written by ADAG to RIL on January 12, 2006, that alleged "fraudulent misuse of powers by RIL officials in execution of alleged agreement on January 12, 2006."

The letter also charged RIL officials of "criminal breach of trust" and "gross violation of fiduciary obligations" in signing the alleged agreement, RCOM statement said.

The letter termed the agreement as "one-sided and not on arms length basis."

Tata Comm to acquire 50% in China’s CEC

Mumbai, June 18: Telecom solutions provider Tata Communications Wednesday said it would acquire 50 percent stake in China Enterprise Communications (CEC) for an undisclosed amount.

"This is an innovative step in our ongoing effort to enable connectivity and managed services across strategic regions and emerging markets that are of high value to our global customers," Tata Communications, Data and Mobility Services, president Vinod Kumar said.

Tata Communications International PTE, a wholly-owned subsidiary of Tata Communications, has signed the equity joint venture agreement with the shareholders of CEC for acquiring 50 percent stake, the company said in a filing to the Bombay Stock Exchange.

"Through the cooperation with Tata Communications we will focus on the development of the domestic market to provide high quality networking service to multinational as well as domestic enterprises in China," CEC president and CEO Zhu Jianhua said.

CEC has a network reach throughout China with no regional restrictions on its service capabilities. CEC provides VPN connectivity reach to 347 cities in China, including Beijing, Shanghai, Ghangzhou and Shenzhan.

The reach complements Tata Communications' virtual private network (VPN) presence in 120 Indian cities and 19 other major business capitals in North America, Europe and Asia.

CITIC (China International Trust and Investment corporation) is a majority stakeholder in CEC, while other stake owners include SASAC and CE-SCM.

Tata Communications investment in CEC is subject to Chinese governmental and regulatory bodies approvals.

Shares of Tata Communications were trading at Rs 438.65, up 1.25 percent on the BSE in morning trade.

Inflation high, RBI steps in to control it: FM on repo rate

New Delhi, June 18: As inflation has touched 8.75 per cent, the highest level during the UPA regime, Finance Minister P Chidambaram on Wednesday said the rate of price rise is high, prompting RBI to tighten money supply.

"Inflation is high. RBI must take steps and it has taken," Chidambaram told reporters after meeting the top brass of the Central Bank of India.

This was the first statement from the Finance Minister after the Reserve Bank hiked its short-term lending rate by 0.25 per cent to 8 per cent putting pressure on interest rates.

Inflation has soared to 8.75 per cent for the week ended May 31. It is set to cross the 9 per cent mark when the official data is released on June 20, which reflect the impact of hike in fuel prices, according to analysts.

The previous high in the UPA regime was 8.33 per cent, as per the provisional figure for the week ended August 28, 2004.

As part of inflation control measures, the RBI had last week increased the repo rate to 8 per cent, prompting the banks to consider a rise in lending rates for consumers and industries.

The continuous rise in inflation has forced the banks to increase interest rates which analyst feel could further add to the cost factor. However, the monetary measures are aimed at cooling the high demand which is pushing up prices.

Most of the banks have the prime lending rates pegged at around 13 per cent. Besides raising the short-term lending rate (repo rate), RBI had also sucked over Rs 27,000 crore out of the economy by increasing the Cash Reserve Ratio by 0.75 per cent in three phases.

China oil subsidies may reach 1.2pc of GDP in 2008: WB
19 Jun 2008 11:54 am

Beijing - The total cost of China's fuel subsidies at home could amount to 1.2 per cent of the country's gross domestic product for this year if international oil prices stay at current levels for the rest of 2008, the World Bank said Thursday.

While the cost of the fuel subsidies may be sustainable for the time being for China, and isn't as large as for other countries such as Indonesia, Malaysia and India, there are strong reasons for Beijing to adjust its fuel prices, the bank said in its latest China Quarterly Update.

China's fuel pricing system remains mostly state-controlled and includes administrative bans on price hikes, subsidies for the country's largest oil producers and import tax refunds for refined oil.

The total cost of the implied subsidy to fuel consumers on refining imported oil for this year could be CNY333 billion, or 1.2 per cent of the GDP, for this year based on current world oil price levels, the bank estimated.

"It is definitely in China's interest to let the big increase in oil prices in the world market to pass through to Chinese firms and households to encourage them to be more energy efficient," said David Dollar, the bank's China country director.

He said any change should be made gradually and should not have a big effect on inflation, especially since allowing for a further appreciation of the yuan exchange rate would reduce any inflationary pressure from such a move.

The World Bank suggested in its update a more efficient way for China to protect the purchasing power of its people would be to let fuel prices increase and introduce direct subsidies for consumers. This method would help China in its aim to improve energy efficiency and environmental quality, and be less distortive on demand, it said.

As world oil prices scale new highs, some analysts have warned higher pump prices in China will actually boost near-term demand rather than contain it, which may ultimately give an upward kick to the prices of China's exports, impacting the global economy.

Jk Tyre acquires 100 %shares of Tornel

Mumbai, June 23: Jk Tyre & Industries has acquired 100 percent shares of Mexican tyre company, Tornel, along with its subsidiaries for Rs 270 crore, making it the largest four-wheeler tyre company in the country.

The acquisition has been made through the Special Purpose Vehicle (SPV) route, which has been financed through a combination of equity and debt, a press release issued in Mumbai on Monday stated.

The company's board had approved this acquisition in its meeting held on April 11 and all formalities and compliances with regard to the acquisition have been made and closing of the transaction took place on June 13, the release said.

The acquisition would help Jk Tyre substantially increase its global footprint. "Strategic location of Mexico offers Tornel free access to the NAFTA trade block and emerging economies of central and Southern America," the release said.

Tornel has a distribution network of 241 distributors and 282 sales outlets across Mexico.

Post-acquisition, the collective capacity of Jk Tyre has risen to 940 tonnes per day with Tornel's production capacity of 290 tonnes per day along with Jk Tyre's capacity of 650 tonnes per day, at its four plants in India.

With this acquisition, Jk Tyre would have an annual capacity of 15.3 million tyres per annum and a combined turnover exceeding USD 1 billion, the release added.

ONGC places Rs 2,207-cr order with Bhel, GE consortium

New Delhi, June 23: ONGC Tripura Power Co, a unit of state-run Oil and Natural Gas Corp, has awarded a Rs 2,207-crore order to a consortium of Bharat Heavy Electricals Ltd and General Electric for its 720 mw plant in Tripura.

"ONGC Tripura Power Company Ltd (OTPC) has placed a letter of award (LoA) on consortium of Bhel and General Electric for the generation of 720 mw of power from natural gas produced by ONGC in the northeastern state of Tripura," a company statement said here.

The 360x2 mw combined cycle gas turbine power plant is being developed by OTPC at Palatana in south Tripura. ONGC has 50 per cent equity stake in OTPC, the balance being held by IL&Fs and the government of Tripura.

BHEL-GE combine beat Alstom to bag the contract.

The first unit of 360 mw would be installed in 42 months, followed by the second unit within three more months, the statement added.

ONGC said state-run Power Grid Corp, ONGC Tripura and the north east region would set up a transmission line at a cost of Rs 1,800 crore to hook Palatana with the national grid at Bongaigaon.

Singapore firm to invest Rs 9 bn in Reid and Taylor
24 Jun, 2008, 1632 hrs IST,

NEW DELHI: Singapore's Indivest Pte Ltd will invest Rs.9 billion in Reid and Taylor, a subsidiary of Indian textile firm S. Kumars Nationwide Ltd (SKNL), through a fresh issue of shares and warrants.

Indivest, an affiliate of GIC Special Investments, would own 25.4 percent of Reid and Taylor, valuing the SKNL subsidiary at Rs.35.40 billion.

"The investment in Reid and Taylor by GIC Special Investments will help to substantially strengthen Reid and Taylor and SKNL's business and their ability to grow in the luxury fabric and apparel and other textile segments of the textile industry," SKNL said in a regulatory statement.