Sun Pharma and Ranbaxy Laboratories might take longer than usual to secure all regulatory clearances for their proposed merger, sources said. The merger, announced on April 6, is being studied by the Securities and Exchange Board of India (Sebi) and the Competition Commission of India (CCI). A senior Sun Pharma executive has reached out to a few government departments, seeking intervention to expedite approval processes. “They (the companies) are concerned unless and until the approvals are in place and the deal is complete, the Sun Pharma management will be unable to officially intervene in Ranbaxy plants and take corrective measures or resolve pending issues with the US drug regulator,” a senior government official whom Sun Pharma Managing Director Dilip Shanghvi recently met here, told Business Standard. Sun Pharma and Ranbaxy declined to comment for this story. On April 6, Sun Pharma had announced it would buy Ranbaxy Laboratories from Japan’s Daiichi Sankyo in an all-share deal pegged at $4 billion, including debt of $800 million on Ranbaxy’s books.
|A LONG WAIT|
This requires greater reporting on the proposed M&As. The proposed merger also requires approvals from stock exchanges, Sebi, the high courts of Gujarat, Punjab and Haryana, creditors and shareholders of both companies. Experts say a Sebi clearance usually came within 21 days of the filing of an application by a company. However, the Sun Pharma-Ranbaxy case might take longer, given the need for additional queries or investigation by Sebi. Sebi is already conducting an investigation, following allegations of insider trading. It had indicated an approval might take time due to legal hurdles. “As a matter of policy, we would not like to offer any comment on specific cases,” a Sebi spokesperson said, responding to a query. Through the three sessions preceding the announcement of the deal on April 6, Ranbaxy’s shares had jumped 24 per cent and its trading volumes had tripled. A single-judge Bench had ordered status quo on the case, restraining the proposed merger on the basis of a plea by two petitioners (one a small investor in the companies). The petitioners had sought the court direct Sebi to probe allegations of insider-trading in the case. Subsequently, however, the stay was lifted as the court decided the merger process was outside the purview of the ongoing probe. The government official quoted earlier said Sun Pharma was keen on early completion of the deal so that it could take the required steps to resolve various issues pertaining to Ranbaxy’s ailing facilities. Four domestic manufacturing facilities of Ranbaxy have been banned from supplying products to the US, following the US Food and Drug Administration finding serious violations of its norms at these units.
Resuming supplies from these plants to the US is important for Sun Pharma, as the US is the largest export market for both companies. When the proposed acquisition was announced in April, Shanghvi had addressing the concerns of regulatory agencies worldwide was a priority.