Will Pfizer counterbid for Ranbaxy?

We could have a takeover battle on our hands, folks. Pfizer is reportedly mulling a hostile bid for Ranbaxy, which just inked a buyout deal with Japan's Daiichi Sankyo. Daiichi contracted to buy the Singh family's 35 percent stake in Ranbaxy, plus mount a tender offer for another 20 percent or more of the outstanding shares. It's a deal worth almost $5 billion.

But hold on. As the story goes, Pfizer would swoop in and offer to buy out Ranbaxy's institutional owners--about 41 percent of the company--and individuals, who account for about 21 percent of the outstanding stock. Presumably, Pfizer would up the ante over Daiichi's 737-rupee-per-share bid. Neither Pfizer nor Daiichi would comment; Ranbaxy said the Daiichi sale is a done deal. But the markets reacted to the rumors anyway. Both Ranbaxy and Pfizer's Indian unit saw their shares leap on the Indian markets, while Daiichi's stock dipped a bit in Tokyo.

Pfizer had been in buyout talks with Ranbaxy about a year ago, sources told India's Business Standard, but those proved fruitless. Why would it want to step in now that Ranbaxy is pledged to another? For the same reasons Daiichi wants it: A major foothold in India's hot emerging market, a strong generics portfolio, access to Ranbaxy's low-cost manufacturing and distribution network. And then there's the $10 billion drug Lipitor. Ranbaxy just got FDA approval--and 180-day exclusivity--to sell a copycat version beginning in March 2010. Why should Pfizer lose all that cholesterol-drug revenue when, with a buyout, it could recapture it?

- see the London Times story
- check out Forbes' rationale for a deal
- read the Wall Street Journal Health Blog post
- find the coverage at India's NDTV
- get the news from India's Economic Times