Ranbaxy heir sells family firm in "emotional" deal
MUMBAI (Reuters) - At a time when family-run Indian companies are expanding their empires around the globe, Ranbaxy Laboratories' (RANB.BO) Malvinder Singh is taking a different path.
Ranbaxy, India's top drug maker by sales, on Wednesday agreed to a deal worth up to $4.6 billion to give majority cID:nBOM196567
Under the deal Malvinder will stay on as CEO and managing director, some 2- two years after he took the reins at the company his grandfather began building up more than half a century ago and which his father had envisioned would become one of the world's top producers of generic drugs.
"For us, it has certainly been a very emotional decision," Malvinder, 35, said at a conference in New Delhi.
"Ranbaxy is my life, my blood. We explored a series of options, and at the end of it, we believed this was in the best interests of the company, the shareholders and the employees."
The deal, priced at a 31 percent premium to Tuesday's closing share price, is in sharp contrast to a spate of overseas acquisitions by Indian companies spanning auto makers and telecom service providers.
"This is not a sell-out. This is a strategic deal to position and transform us to the next level ... It was time to do something historic, something transformational," he said when asked why the family was selling its holding.
Ranbaxy came in to the hands of Bhai Mohan Singh in 1952 for 250,000 rupees ($5,830) when his cousins defaulted on a loan. They had placed Ranbaxy, then a distributor of imported medicines, as collateral.
His son Parvinder later brought in D.S. Brar as managing director and the company grew, but father and son did not see eye to eye on several matters, including the need for professional management at Ranbaxy.
Parvinder died in 1999, and at the time Malvinder was considered too young to run the company he had joined as a management trainee in 1994.
He took over after a tough 2005, when Ranbaxy's profit fell by almost two-thirds and its share price nearly halved as stiff competition, high legal and research costs and patent battle setbacks weighed.
STEPPING OUT
Since then, Ranbaxy has made a string of acquisitions, including eight in 2006, which some analysts have said had stretched the company as it chased a goal of being among the top 5 generic companies with revenue of $5 billion by 2012.
Its overseas buys included Romania's Terapia for $324 million, Bayer's BAYG.DE generics business in Germany, the generics business of GlaxoSmithKline (GSK.L) in Italy and Spain, as well as South Africa's Be Tabs for $70 million
Malvinder and younger brother Shivinder have also been looking beyond pharma: the group has added hospitals and diagnostics, and also has a presence in financial services and travel. Continued...
