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Japanese acquisition in India's Ranbaxy

Justin Paul (Nagoya University of Commerce and Business, Nagoya, Japan)
Pragya Bhawsar (Institute of Management, Nirma University, Ahmedabad, India)

Competitiveness Review

ISSN: 1059-5422

Article publication date: 4 October 2011

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.

Keywords

Citation

Paul, J. and Bhawsar, P. (2011), "Japanese acquisition in India's Ranbaxy", Competitiveness Review, Vol. 21 No. 5, pp. 452-470. https://doi.org/10.1108/10595421111171957

Publisher

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Emerald Group Publishing Limited

Copyright © 2011, Emerald Group Publishing Limited