In a swift and unexpected move, Japanese drug maker Daiichi Sankyo took complete control of Ranbaxy Laboratories, India's largest pharmaceutical company by revenues in which it had acquired a 63.92 per cent stake in June last year, after all representatives of the former Indian promoter family resigned from the board on Sunday.
Following a board meeting on Sunday morning, former promoter Malvinder Mohan Singh, whose term was originally supposed to run till 2013, resigned as chairman and managing director. "It was a difficult decision to separate from Ranbaxy, but it was the right time to do so," Singh told Business Standard.
Tsutomu Une from Daiichi has been appointed chairman. Atul Sobti, who was originally nominated on the board by the former Indian promoters, has been appointed chief executive and managing director for three years.
Besides Singh, two other Singh-family board nominees, Sunil Godhwani and Balvinder Dhillon, also resigned from the board.
Sources close to the development said the premature departure of the former promoter family from Ranbaxy's management was on account of the drug-maker's deteriorating performance - in the last three quarters, the company made losses of Rs 1,100 crore (Rs 11 billion), mainly on account of forex derivative transactions.
Daiichi acquired the Singh family's 63.92 per cent stake in Ranbaxy for Rs 19,803 crore (Rs 198.03 billion) (or nearly $5 billion), a transaction that valued Ranbaxy at Rs 30,980 crore (Rs 309.8 billion).
Under the deal, the Singh family was expected to nominate four members to the company's 10-member board with the Japanese drug major appointing the rest, including independent directors.
Announcing the change in the management at a press conference, Une said the change was needed for "the accelerated hybrid growth of the company and its integration with Daiichi Sankyo". He, however, insisted that the change was according to the agreement.
Asked whether Singh was hindering the integration process, Une declined to comment. Malvinder Singh was not present at the press conference.
Sobti, meanwhile, clarified that the decision was taken by the Ranbaxy board and Daiichi wasn't involved. He added that mark-to-market losses on forex derivative deals in the first quarter might be reversed and the company is moving ahead to integrate Daiichi and Ranbaxy operations.