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Our Bureau

New Delhi, Jan. 5 Daiichi Sankyo on Monday said it will write down a ¥359.5 billion ($3.84 billion) valuation loss on its acquisition of Ranbaxy Laboratories Ltd.

While Daiichi Sankyo had announced in June that it was buying controlling stake at Rs 737 a share, Ranbaxy’s shares are currently trading around Rs 250 on the BSE

On a consolidated basis, the Japanese firm plans to log a loss of ¥354 billion in the fiscal third quarter through December due to the plunge in share price. However, in a statement issued to the Tokyo Stock Exchange, Daiichi Sankyo said this would not have an impact on its forecasts for net sales, operating income or its cash flow for the third quarter fiscal.

The company also said the step was taken to meet the strictest accounting standards to ensure it remains on a firm financial footing and considers its investment in Ranbaxy as essential in ensuring business growth.

Ranbaxy shares have fallen sharply due to weak global markets and after the US authorities last year blocked imports of more than 30 drugs due to concerns about manufacturing standards. The US ban and a weakening rupee had also resulted in a Rs 352-crore loss to Ranbaxy on a standalone basis during the third quarter ended September 30, 2008. It had reported a profit of Rs 168 crore during the same quarter last year.

Ranbaxy posted a $73 million translation loss due to the weakening rupee and wrote down the value of its inventories by $59 million after the US import ban. The Japanese drug maker now owns 63.9 per cent stake in Ranbaxy. The $4.6-billion purchase of a controlling stake was the biggest acquisition of an Indian company by a Japanese firm.

More Stories on : Pharmaceuticals | Mergers & Acquisitions | Ranbaxy Laboratories Ltd

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