(Adds response from Singh family, details; updates share price)
By Tony Munroe
MUMBAI May 23 Shares in Ranbaxy Laboratories
Ltd fell as much as 10.7 percent on Thursday after
majority shareholder Daiichi Sankyo Co said it believed
former shareholders of the Indian company hid information
regarding U.S. regulatory probes.
Last week, Ranbaxy pleaded guilty to felony charges related
to drug safety and agreed to pay $500 million in civil and
criminal fines under a settlement with the U.S. Department of
Daiichi Sankyo did not name the shareholders in its
statement late on Wednesday.
In 2008, Japan's No. 3 drugmaker bought 63.9 percent of
Ranbaxy for $4.2 billion from the controlling shareholder group,
led by brothers Malvinder Singh and Shivinder Singh, as well as
through a tender offer and an issue of new shares.
A statement issued on behalf of the Singh family on Thursday
called Daiichi Sankyo's accusation "false and baseless," and
said the Japanese company had been made aware of ongoing U.S.
investigations during negotiations to buy Ranbaxy.
"The belated suggestion, made years after the fact, that
information was concealed from and/or misrepresented to Daichii
Sankyo is false and designed to divert attention away from
Daiichi Sankyo's own failures to protect itself and its
shareholders in the negotiations and agreement with the Singh
family shareholders of Ranbaxy," the statement said.
Ranbaxy's U.S. settlement last week was the largest-ever
with a generic drugmaker over drug safety and had been in the
works for some time. In December 2011, Ranbaxy set aside $500
million to resolve the potential criminal and civil liabilities
related to the investigation into its manufacturing practices
and falsifying data.
Ranbaxy reached a related settlement agreement with the U.S.
Food and Drug Administration in 2011.
"Daiichi Sankyo believes that certain former shareholders of
Ranbaxy concealed and misrepresented critical information
concerning the U.S. DOJ and FDA investigations," the Japanese
company said in a statement on its website on Wednesday, adding
that it was pursuing legal remedies.
The Singh brothers, together worth $2.6 billion, according
to Forbes, control Fortis Healthcare and financial
services group Religare Enterprises Ltd.
Malvinder Singh, now 40, had agreed to remain as CEO of
Ranbaxy, India's largest drugmaker by sales, for five years
following Daiichi Sankyo's takeover but left in 2009.
Ranbaxy shares closed 8.53 percent lower at 394.30 rupees on
Thursday, lagging a Mumbai market that fell 2.1 percent.
Daiichi shares fell 6.4 percent in a Tokyo market that
closed down 7.3 percent.
(Additional reporting by Sumeet Chatterjee; Editing by Sophie