India's Ranbaxy on European buying spree

India's largest drugmaker, Ranbaxy Laboratories went on a buying spree late March, announcing plans to acquire the Romanian firm Terapia and the unbranded generics business of GlaxoSmithKline in Italy. The firm aims to increase its annual sales to $2.0 billion by 2007, up from the $1.18 billion recorded for 2005.

In the first of these, Ranbaxy signed a definitive agreement on March 29 to take a 96.7% stake in Terapia, the largest independent generics company in Romania, for a consideration of $324.0 million, including $11.5 million of debt.

Established in 1921,Terapia has a strong brand name and a consistent track record of growth and profitability. Its pro forma 2005 sales were approximately $80.0 million, underlying profits was around $27.5 million and the company has strong earnings before interest, tax, depreciation and amortization margins in excess of 35%, says Ranbaxy, noting that the acquisition will be earnings per share accretive immediately.