New Delhi, Oct. 3: The cabinet today approved the acquisition of Ranbaxy Laboratories by Japanese drug maker Daiichi Sankyo for about Rs 21,500 crore.

“Daiichi Sankyo is now free to acquire Ranbaxy,” said Union finance minister P. Chidambaram after a meeting of the cabinet committee of economic affairs here today.

In June, Daiichi entered into a share purchase agreement with Ranbaxy promoters to acquire a 34.8 per cent stake in the company.

The Japanese firm then made an open offer for another 20 per cent stake in Ranbaxy.

The offer, priced at Rs 737 per share, opened on August 16 and closed on September 4. While Daiichi had sought to acquire 9.25 crore shares, the open offer elicited a positive response and was oversubscribed.

As part of the acquisition, Daiichi agreed to buy the shares of another pharma company, Zenotech Laboratories, in which Ranbaxy has a 47 per cent stake, through an open offer and direct purchase of shares.

Since the deal involved investments of more than Rs 600 crore, it needed the approval of the cabinet.

Ranbaxy shares rose 9.2 per cent to Rs 274.75 before the cabinet clearance, the biggest intra-day gain since July 16. It closed the day at Rs 263.85, a gain of 4.83 per cent from its previous close.

The shares, however, rose because the US government had offered to withdraw a motion seeking to force the company to turn over audit reports.