Daiichi Sankyo’s planned acquisition of Ranbaxy Laboratories has received a boost with the news that the Indian government has approved the Japanese drugmaker’s $4.6 billion offer.

The country’s finance minister P Chidambaram confirmed the government’s backing for the deal which had been referred to India’s Cabinet Committee on Economic Affairs. In June, Daiichi Sankyo agreed to buy the 34.8% controlling stake of Ranbaxy's founders, the Singh family, and made an open offer for a further 20% of the Gurgaon-based firm’s shares.

As part of the agreement, Daiichi Sankyo is to make an open offer to buy up to 20% of another Indian firm, Zenotech Laboratories, which is 47% owned by Ranbaxy. The purchase still needs the approval of India's central bank, but is expected to be completed by March next year.

Ranbaxy shares leapt but that rise was more a result of reports that the US government has offered to withdraw a motion seeking to force the company to turn over audit reports. The offer stands if the documents the firm submitted last week as part of a probe into whether it falsified data and failed to meet quality-control specifications in manufacturing generic drugs for the USA, are found to be complete. Ranbaxy has denied the allegations.

The company suffered another blow in the USA last month after the Food and Drug Administration blocked the import of more than 30 Ranbaxy drugs that have been made in two plants in India after concerns were raised about its manufacturing practices.