18.

Make the following analysis

Number Particulars Acquirer(Daichii Target(Ranbaxy)

Sankyo)
1 Total earnings 66.0 0.5
2 Pre EPS 46.88 -27.89
3 Post EPS 93.11 -0.92
4 MPS 1020.11 67.59
5 No. of Employees 15349 12174
(pre-merger)
6 No. of employees 28895 9655
(Post-merger)
7 Market Return -18.92 NA

19. What has been the performance of the involved companies after the
merger and acquisition?

The EPS showed a double fold increase without much of increase in gross profit which
indicated that the reserves & surplus should have been made available accordingly. The
balance sheet of Daiichi Sankyo indicated that the current liabilities had increased to 161%
when compared to current assets which had decreased by (15.43%). COGS significantly
decreased in the year 2008 due to the increase in purchase of Investments owing to the
acquisition. Three weeks after the deal, Daiichi Sankyo reported currency – exchange losses
of Rs 9 billion in 2008.

In the immediate year after the acquisition Ranbaxy reported a loss of INR 9512.05 Million
and daichii in spite of diversifying its footprint booked a loss of 1,35,866.62 million and they
also made a onetime goodwill write-down 0f 221.48 billion investment in Ranbaxy. These
losses were mainly rooted in Ranbaxy’s poor performance owing to FDA ban and bad
decision in hedging currency risk.
20. Your views and learning’s in this exercise. Emphasis on the aspects you

discovered if any? Which were not covered by the secondary sources you
accessed?

An acquisition involves one firm buying only a portion of another firm.it means a part
of the firm or the assets will be taken over by the other company. In our study we
came to know that before acquiring Ranbaxy Daiichi Sankyo should have made a
detailed study on the company which it is taking over or going to acquire instead the
only focus that Daiichi Sankyo had was that it wanted to set up its business in other
countries as well as expand its business which later led them to a problem. During the
time of acquisition Daiichi Sankyo instead of taking a sudden decision of buying
higher % of shares than that of what was estimated it could have made a detailed
study about the company and opted for buying the estimated percentage of shares or
less. After the acquisition the company did not focus much on the management.
Because of which within a year 4 higher authorities had quit their job same way the
CEO of the company who had to work for 5 years quit the job in one year because of
which there were a disruption in the business. The company could have focused bit
more on the management instead of focusing on meeting their target that is making
profit.

Some of the key aspects to take into consideration

 Daiichi Sankyo must have done a detailed study about Ranbaxy before acquiring.

 Daiichi could have selectively looked at data which supported its hypothesis, while
believing that it had taken on board all data points to make a considerable decision
hence Rational judgement has to be made in case of meeting the target.
 Daiichi Sankyo should have selected their partner wisely.
 Ranbaxy should have been more transparent to their parent company that is Daiichi
Sankyo to carry out the business in an ethical way.

21. Continuous updating of information based on current happening of the

firms after M&A should be incorporated in the report

In 2008, Daiichi bought a large stake in Ranbaxy in a deal worth about $4.6 billion. But the
Indian company suffered from quality issues that resulted in an order from the U.S. Food and
Drug Administration to halt exports to that market, among other blows. Ranbaxy was sold to
Indian peer Sun Pharmaceutical Industries in 2014, and the following April, Daiichi sold off
the Sun shares it had received as payment, extricating itself from management of Ranbaxy.
Later The High Court of Delhi ordered owners of the former Ranbaxy Laboratories to pay
about 35 billion rupees in damages to Japanese pharmaceutical company Daiichi Sankyo,
upholding the verdict of an international arbitration tribunal. Ranbaxy had cost Daiichi
around $5 billion and was supposed to be a key part of its overseas strategy. Instead, it turned
into a major liability and six wasted years.On April 7 2014 Sun Pharmaceutical Industries
Ltd acquire Ranbaxy Laboratories Limited, after this merger, Ranbaxy delisted from the
Indian Stock Exchanges, with Ranbaxy shareholders receiving 0.8 shares of Sun Pharma for
each share of Ranbaxy.

.Through the merger, Sun Pharma becomes the fifth-largest specialty generics company in the
world and the largest pharmaceutical company in India”

In the present scenario Daichii’s performance has been improved, Trade price has been
increased from dollar 34.49 to 38.39.there was positive change in the price which indicates
that there was improvement their performance.

It has also made organisational changes to oversee the company’s strategy priority which
includes delivering 7 new molecular entities in oncology by 2025.They are planning to
explore the sale of its over the counter drug business.