Reuters: Hot Stocks: UPDATE 1-Ranbaxy slumps after Daiichi Sankyo says was misled

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UPDATE 1-Ranbaxy slumps after Daiichi Sankyo says was misled May 23rd 2013, 14:59 Thu May 23, 2013 10:59am EDT (Adds response from Singh family, details; updates share price) By Tony Munroe MUMBAI May 23 (Reuters) - Shares in Ranbaxy Laboratories Ltd fell as much as 10.7 percent on Thursday after majority shareholder Daiichi Sankyo Co said it believed former shareholders of the Indian company hid information regarding U.S. regulatory probes. Last week, Ranbaxy pleaded guilty to felony charges related to drug safety and agreed to pay $500 million in civil and criminal fines under a settlement with the U.S. Department of Justice. Daiichi Sankyo did not name the shareholders in its statement late on Wednesday. In 2008, Japan's No. 3 drugmaker bought 63.9 percent of Ranbaxy for $4.2 billion from the controlling shareholder group, led by brothers Malvinder Singh and Shivinder Singh, as well as through a tender offer and an issue of new shares. A statement issued on behalf of the Singh family on Thursday called Daiichi Sankyo's accusation "false and baseless," and said the Japanese company had been made aware of ongoing U.S. investigations during negotiations to buy Ranbaxy. "The belated suggestion, made years after the fact, that information was concealed from and/or misrepresented to Daichii Sankyo is false and designed to divert attention away from Daiichi Sankyo's own failures to protect itself and its shareholders in the negotiations and agreement with the Singh family shareholders of Ranbaxy," the statement said. Ranbaxy's U.S. settlement last week was the largest-ever with a generic drugmaker over drug safety and had been in the works for some time. In December 2011, Ranbaxy set aside $500 million to resolve the potential criminal and civil liabilities related to the investigation into its manufacturing practices and falsifying data. Ranbaxy reached a related settlement agreement with the U.S. Food and Drug Administration in 2011. "Daiichi Sankyo believes that certain former shareholders of Ranbaxy concealed and misrepresented critical information concerning the U.S. DOJ and FDA investigations," the Japanese company said in a statement on its website on Wednesday, adding that it was pursuing legal remedies. The Singh brothers, together worth $2.6 billion, according to Forbes, control Fortis Healthcare and financial services group Religare Enterprises Ltd. Malvinder Singh, now 40, had agreed to remain as CEO of Ranbaxy, India's largest drugmaker by sales, for five years following Daiichi Sankyo's takeover but left in 2009. Ranbaxy shares closed 8.53 percent lower at 394.30 rupees on Thursday, lagging a Mumbai market that fell 2.1 percent. Daiichi shares fell 6.4 percent in a Tokyo market that closed down 7.3 percent. (Additional reporting by Sumeet Chatterjee; Editing by Sophie Walker) Link this Share this Digg this Email Reprints

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