Japan's second-largest pharmaceutical drug manufacturer, Daiichi Sankyo will buy out the entire promoter stake of 35% in India’s largest pharmaceutical company, Ranbaxy Laboratories at Rs 737 per share.

Daiichi Sankyo has informed that it has entered a binding deal to acquire the 35% stake of the Singh family having controlling stake in Ranbaxy. The price is at 31% premium to Tuesday's closing price of Ranbaxy’s listed shares.

Under the terms of the deal, Malvinder Singh, grandson of Ranbaxy founder Bhai Mohan Singh, will continue as CEO and managing director of the company.

Further, the Japanese company has stated that it will also make an open offer to acquire controlling stake of 51% in the company at Rs 737 per share. The total transaction value is expected to be between $3.4 - 4.6 billion and would value Ranbaxy Laboratories at $8.5 billion.

The Japanese company will fund the stake buy through internal accruals and debt. Upon completion of the transaction, Ranbaxy is expected to become a subsidiary of Dalichi Sankyo.

The proposed deal will help the Daiichi to enter the generics drug business not just in India but also globally where Ranbaxy has strong presence.

The deal, which is subject to shareholder and regulatory approval, is expected to be completed by the end of March 2009.

TopNews had suggested long term investors to consider investment in Ranbaxy after the stock market crash in January this year. Shareholders can expect decent returns on their portfolio.