Daiichi Sankyo is buying control of India’s Ranbaxy Laboratories in a friendly takeover that could be worth as much as $4.6 billion.

Under the terms of the deal, the Japanese drugmaker will acquire the 34.8% controlling stake of Ranbaxy's founders, the Singh family, and make an open offer for a further 20% of the Gurgaon-based firm’s shares. The purchase price represents a premium of 53.5% to Ranbaxy’s average daily closing price on India’s National Stock Exchange for the three months ending on June 10, 2008 and up 31.4% on yesterday.

Daiichi Sankyo is offering 737 rupees per share, around $17.30, in each and this gives the transaction a value of $3.4-$4.6 billion. Once closed, and the deal has been unanimously approved by both boards of directors, Ranbaxy will be valued at around $8.5 billion.

Malvinder Singh, Ranbaxy’s chief executive, said the link-up with the Tokyo-headquartered firm “puts us on a new and much stronger platform to harness our capabilities in drug development, manufacturing and global reach”. He went on to say that by pooling their resources, the companies “would enter a new orbit to chart a higher trajectory of sustainable growth in the medium and long term in the developed and emerging markets organically and inorganically”.

His counterpart at Daiichi Sankyo, Takashi Shoda, said the deal gives his firm “a new, strong presence in the fast growing business of non-proprietary pharmaceuticals" as Ranbaxy is best-known as one of the world’s leading generics player. He went on to say that “we will respect Ranbaxy’s autonomy as a standalone company as well”.

Mr Shoda was very complimentary about the “management skill” of Mr Singh and he will become a member of the “senior global management” of Daiichi Sankyo, while continuing to lead Ranbaxy as CEO. Upon closing he would also assume the position of chairman of the board.

The deal is the latest in a growing list of acquisitions to be made by Japanese pharmaceutical companies who have been hit by limited domestic growth. Daiichi Sankyo itself recently acquired German biotechnology company and cancer specialists U3 Pharma for 150 million euros.

Takeda Pharmaceutical Co has just completed the purchase of Millennium Pharmaceuticals for $8.8 billion, while Eisai recently acquired MGI Pharma for $3.9 billion. Last November, Astellas Pharma boosted its presence in the USA by acquiring antibody research firm Agensys in a deal that could be worth up to $537 million.