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Japanese acquisition in India's Ranbaxy

Japanese acquisition in India's Ranbaxy 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. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Competitiveness Review: An International Business Journal incorporating Journal of Global Competitiveness Emerald Publishing

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Publisher
Emerald Publishing
Copyright
Copyright © 2011 Emerald Group Publishing Limited. All rights reserved.
ISSN
1059-5422
DOI
10.1108/10595421111171957
Publisher site
See Article on Publisher Site

Abstract

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.

Journal

Competitiveness Review: An International Business Journal incorporating Journal of Global CompetitivenessEmerald Publishing

Published: Oct 4, 2011

Keywords: India; Pharmaceuticals industry; Acquisitions and mergers; Strategy; Expansion

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