Japanese Acquisition in India's Ranbaxy
Competitiveness Review: An International Business Journal Vol. 21 No. 5, 2011 pp. 452-470
19 Pages Posted: 22 Feb 2014
Date Written: February 20, 2014
Purpose – The purpose of this paper is to examine the rationale and synergies of a Japanese firm’s acquisition of India’s leading pharmaceutical firm, Ranbaxy, and to answer the following pertinent questions: could Ranbaxy have been able to survive and succeed, had the firm not gone for this strategic sale to a foreign firm? What is the rationale for this strategic sale immediately after undertaking many major acquisitions during the previous two-year period? For what strategic reasons did a Japanese firm pay a premium price for this international acquisition?
Design/Methodology/Approach – An exploratory method was used in this study to analyze the rationale and synergies of the acquisition. The method of case writing has been followed as a design (case situation first, then goes back to the past, then comes back to the current situation).
Findings – The findings confirm that Ranbaxy got a premium price for agreeing to be acquired for their share (much higher price than the market price). Japanese firm Dai-Ichi got greater market access and control of Ranbaxy, which were driving factors for them to pay a higher share price for Ranbaxy.
Originality/Value – This original study gives insight into the points to be taken into consideration while thinking about international acquisitions.
Keywords: India, Pharmaceuticals industry, Acquisitions and mergers, Strategy, Expansion
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