Financial Daily from THE HINDU group of publications
Friday, Mar 31, 2006
Financial Daily from THE HINDU group of publications Friday, Mar 31, 2006 |
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Corporate
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Mergers & Acquisitions Ranbaxy scores hat-trick with Belgian buy Our Bureau
Shopping spree The buy gives Ranbaxy a footprint in the Benelux market with combined size of $7.6 b Ethimed has over 20 product registrations; is ranked 10th among generic companies in Belgium.
New Delhi , March 30 Ranbaxy Laboratories Ltd is on a shopping spree in Europe. Ethimed NV of Belgium is the third acquisition for the domestic pharmaceutical company this week, after taking over GlaxoSmithKline's generic business Allen SpA of Italy and Terapia in Romania. The company claims that this deal would give it a foothold in the Benelux territories, which include Belgium, The Netherlands, and Luxembourg. The acquisition follows similar strategic moves by Ranbaxy previously in the larger European markets and will allow it to anticipate local market dynamics and capitalise on the changing business landscape.
Large market
Belgium is the seventh largest pharmaceutical market in Europe, while the Netherlands is the ranked sixth. The combined market size including Luxembourg is worth $7.6 billion. The Belgian market is largely branded and high-priced market, with increasing generic penetration. The acquisition positions Ranbaxy favourably to capture a significant portion of this expanding market. Ethimed has over 20 product registrations and is ranked 10th among generic companies in Belgium. In an official statement, Mr Peter Burema, President (Europe, CIS, Africa, and Latin America), Ranbaxy, said: "Ethimed offers Ranbaxy a ready and robust distribution network to exploit new product opportunities in the future. It also provides the company a strong base from where we can manage and expand our operations in the Benelux countries. We see this acquisition as strategic to our business in Europe."
Inorganic growth
Analysts tracking the sector said that the acquisition is expected to be a small one and that the company is hoping to grow in size through inorganic growth. On Wednesday, the company paid $324 million for acquiring Terapia. "Ranbaxy has aimed to become a $2-billion company by 2007 and it is doing this through European acquisitions. Buying out companies in the US is a far more expensive proposition," the analysts said.
Nod to borrow more
The company has obtained approval for raising up to $1.5 billion through appropriate securities and had raised $440 million through the Foreign Currency Convertible Bonds (FCCBs). Besides this, the company has received approval to borrow up to Rs 5,000 crore in excess of its paid-up share capital and free reserves. "Since the company has the enabling provision to raise more resources, we can expect some more buyouts," an analyst said. The Ranbaxy scrip rose by 9.92 per cent on Thursday to close at Rs 451.95 on the BSE.
Related Stories: More Stories on : Mergers & Acquisitions | Pharmaceuticals | Overseas Investments | Ranbaxy Laboratories Ltd
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