Ranbaxy's valuation then and now

How has Ranbaxy's valuation been changing, first following the deal with Daiichi Sankyo in 2008 and now with the Sun Pharma acquisition? Daiichi Sankyo had valued Ranbaxy at $8.5 billion and for a 63.92 per cent stake paid Rs 19,804 crore or  $4.6 billion with the price for each share at Rs 737. At the time, the rupee was Rs 43 to a dollar. In the deal with Sun Pharma, the total equity value of the transaction is $3.2 billion with each Ranbaxy share priced at Rs 457. While the total equity value is $3.2 billion, taking Ranbaxy's debt into account, the transaction is worth over $4 billion.

(Source: Ranbaxy)

No. of shares 129,934,134  Amount paid per share Rs 737      Amount paid     Rs 95761,456,758   Promoter share            30.91%
     
Open Offer       92519126   Amount paid per share  Rs 737      Amount paid      Rs 68186595862   Promoter share            22.01%

Preferential issue   46258063   Amount paid per share  Rs 737  Amount paid   Rs 34092192431     Promoter share               11.00%

Total No. of shares      268711323                                    Total Amount paid Rs 198040245051      Total   shares                63.92%

Now, under the deal with Sun Pharma, Ranbaxy shareholders will receive 0.8 shares of Sun Pharma for each share of Ranbaxy and the exchange ratio represents an implied value of Rs 457 for each Ranbaxy share and the transaction has a total equity value of approximately $ 3.2 billion.

But just on the basis of the depreciation of the rupee against the dollar, the Ranbaxy-Daiichi deal now would itself be valued much lower in dollar terms. Consider this: