Calm and patient, Sun Pharma's Dilip Shanghvi emerges a winner in the end

Updated: Apr 8 2014, 19:58pm hrs
Dilip ShanghviGiving stock works out to be expensive but here we see potential in a relationship with Daiichi. (Reuters)
It might be another blockbuster year for Dilip Shanghvi but much like his corporate headquarters, tucked away in a distant corner of Mumbais western suburb of Andheri, Shanghvi likes to stay away from the limelight. Thats Shanghvi for you, unassuming and matter-of-fact, wearing his success lightly even if hes just signed off on a game-changing deal the acquisition of Ranbaxy Laboratories in an all-stock transaction.

But thats his style, playing down an event however significant. Shareholders dont doubt that this buyout, too, will make money, even if theres some pain initially. Shanghvi has always been modest about his success with acquisitions, all 16 of them and most of them bought at distressed valuations. And hes understood the generics game; his firm makes generic versions of oncology drugDoxil and the anti-diabetic Prandin. Which is why this time around, hes chosen to part with stock.

Giving stock works out to be expensive but here we see potential in a relationship with Daiichi. That is an important part of the transaction and that is why we decided to dilute Sun Pharmas shareholders, Shanghvi explained on the analyst call on Monday morning. He answered questions patiently, taking pains to point out the the benefits of the buyout of Ranbaxy, sounding confident but not euphoric as one might have expected. He explained how the merger would create synergies of $250 million over three years. Typically, Sun looks at a payback period of somewhere between five and

six years.

Im going in with the same reference point for this deal too, Shanghvi said... Sun Pharma, which was set up three decades ago, is set to hit a turover of over R16,000 crore in FY14, double the R8,020 crore crore reported just two years back. The soft-spoken Shanghvi, 59, is never stressed even in the most trying and tiring moments of the excruciating long and difficult takeover of the Israel-based Taro, Shanghi remained unfazed. Thats despite having put down $106 million upfront for the initial stake of 36% a lot of money in those days. In the end he managed to buy out Taro at a much smaller price tag of $200 million compared to the $454 million originally envisaged. His patience and perseverance paid off. Indeed, the Sun chief confesses he was never tense. His philosophy, he told FE in an interview a couple of years back, is to not worry about what he cannot change. Even Templetons Mark Mobius was forced to concede that Sun should take control of Taro acknowleding the contribution of the Indian firm.

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