News: http://economictimes.indiatimes.com/articleshow/3121924.cms
Ranbaxy's promoters (The Singh family) sold off their entire family stake (34 odd percent) to Japan's Daiichi - which itself is part of a sort of Zaibatsu of merged Jap drug firms.
The deal was valued at 20 times Ranbaxy's EBITDA - which means - Ranbaxy will take 20 years to generate profit sufficient enough make Daiichi's the 4.6 billion dollars or so its shelling out for a 50.1% stake.
It tells us a lot of things:
-> In India @ 8 % interest rate on government bonds, say, it takes about 9/10 years to double your money. So no one in their sane minds would buy some asset which takes 20 years to pay back.
-> In Japan - where risk free Yen rates are like 0.5% or 0.75% - in 20 years a 100 bucks becomes a pathetic 110 or 113 bucks (P*(1+r/100)^n)) - an asset which pays back better than the Standard risk free BOJ rate AND something which fits into a business profile is obviously attractive to Daiichi.
-> Its a great deal for the Singhs - its all cash - and a HUGE premium - which only maybe the Japs can afford - why ? http://www.fxstreet.com/fundamental/interest-rates-table/ [ For eg. Interest rates are higher in other places - Brazil, South Africa etc. rates are 10%-12% etc. so theyre better off putting the money into their banks and sitting tight :) ]
Its still low in the US - at 2 - 2.5 % - but definitely not 0.5/0.75
-> Starting this weekend - im going to value all pharma companies - cipla, sunpharma, orchid, shasun - the works - all with shaky management/rumored take over canditates and - make a maybe 10,00,000 portfolio at today's low stock prices and hopefully make a 10,00,000 profit :)
Like i said - lotsa stimulus - too little energy
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3 comments:
It's officially declared that now I have a true business minded friend.....
that is SO lame hari mama - i feel so down that i cant think of more interesting to write.
p.s.im going on a 2 day holiday to the hills starting tomorrow - Yipee !!
Money matters!
(and in this case it was 10,000 Crores for that 34.8% stake)
Ranbaxy has or I should say had brilliant minds behind. Am sure there must be more competitive ideas.
Let's wait n watch...
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