Daiichi may book non-cash loss of $3.9 bn on Ranbaxy buy in Q3

NEW DELHI: Japan���s Daiichi Sankyo, the new owner of India���s largest drugmaker Ranbaxy Laboratories, expects a non-cash valuation loss of $3.9 billion on its acquisition of the Indian company for the third quarter ended December 31. Daiichi Sankyo said that this would affect the company���s consolidated net income for the financial year ending March 2009 though it is yet to ascertain the impact.

���On a non-consolidated basis, Daiichi Sankyo plans to record a non-cash valuation loss of 359.5 billion yen on its shares in Ranbaxy in its fiscal third-quarter to reflect a more than 50% decline in the market value of these securities versus the purchase price,��� a company release said.

Daiichi Sankyo estimates that on a consolidated basis, the loss due to writedown of goodwill, will be 354 billion yen.

Last year, Daiichi Sankyo paid Rs 737 per share, or about $4 billion, to buy 63.9% stake in Ranbaxy. But the Indian company���s shares have fallen to almost a third of the purchase price due to the global financial meltdown. Ranbaxy scrip closed at Rs 249.80, down 0.18% from its previous close, on BSE on Monday.

Daiichi Sankyo said that its forecasts for non-consolidated net sales, operating income or cash flows for the third quarter will not be impacted because of the anticipated extraordinary losses. But, these items would adversely impact the company���s consolidated financial results forecasts for net income for the nine-month period ended December 31, 2008 and for fiscal year 2008-09.

Daiichi Sankyo may also revise its yearly earnings outlook. ���The company is currently reviewing the impact of the consolidation of Ranbaxy���s financial results (including the anticipated extraordinary losses outlined above) on the group���s financial forecasts following its change of status to group subsidiary. The company plans to report consolidated financial results that fully reflect Ranbaxy���s contribution when it reports results for the third quarter of fiscal year 2008,��� the Japanese drugmaker added.