Sun Pharmaceutical Industries Ltd. dropped the most in more than five years after Daiichi Sankyo Co. sold its stake in the Indian drugmaker.
Daiichi Sankyo raised $3.2 billion after selling all the 215 million shares it held in Sun Pharma, according to a person with knowledge of the matter. The shares were sold at an average price of about 931.6 rupees apiece, near the low end of a marketed range, the person said, asking not to be identified because the information is private. That is about 11 percent lower than Sun Pharma’s closing price on Monday.
Sun Pharma dropped 8.8 percent to 952.20 rupees, the biggest decline since June 2009. The share sale is India’s biggest-ever block trade, according to data compiled by Bloomberg.
Daiichi received the stake as part of the sale of its Indian unit Ranbaxy Laboratories Ltd. to Mumbai-based Sun Pharma last year, which ended years of effort by Daiichi to turn around the ailing drugmaker. Daiichi Sankyo had seen its shares fall after it took writedowns on the Indian drugmaker and failed to raise manufacturing conditions at the unit to satisfy U.S. Food and Drug Administration concerns.
“Long term, this is positive, it removes the overhang in terms of Daiichi’s stake,” said Nitin Agarwal, an analyst at IDFC Securities Ltd. in Mumbai, referring to Sun’s shares. “And if there is so much institutional demand at this price, it clearly shows there is a lot of appetite for the stock.”
Sun now faces the challenge of bringing back into compliance four Ranbaxy plants that were banned from exporting to the U.S. India’s richest man, billionaire Dilip Shanghvi, is Sun’s largest shareholder.
Daiichi Sankyo closed 4.4 percent higher at 2,051 yen.
“Daiichi Sankyo had to take a writedowns on Ranbaxy five years ago and now they have a good chance to recoup that money, and to plow it into their business,” said Abhishek Singhal, an analyst at Macquarie Securities in Mumbai. “They would be looking at growth opportunities in Japan and the rest of the world -- acquire R&D assets, possibly deploy the money there. It’s obviously the right thing to do from their point of view.”
The Japanese drugmaker owned about 8.9 percent of Sun Pharma and has said the sale won’t affect the companies’ collaboration efforts.