New Delhi: Ranbaxy Laboratories is planning to raise $2 billion via American Depository Shares (ADS) to fund the proposed acquisition of German pharma firm Merck's generics business.

Bids for the business, valued at $5.2 billion, are likely to be opened by the second week of March. Ranbaxy's shares on the BSE closed up 1 pc at Rs395.50 yesterday.

The other companies in the race for the Merck business are: Teva Pharmaceutical Industries; the world's largest generics company; Novartis AG's Sandoz generics unit; Iceland's Actavis; and Dr Reddy's Laboratories. Cipla recently withdrew from the race.

Private equity groups such as Carlyle and Blackstone may partner Indian firms in the auction.

Ranbaxy might have to take another proposal to its board of directors to raise the earlier limit of up to $1.5 billion (using various instruments to fund growth, including acquisitions) set in October 2005.

Ranbaxy had already exhausted $450 million of that through foreign currency convertible bonds (FCCBs) to fund its eight acquisitions, including the $324 million buy of Romania's largest independent generic company. Terapia.

Merck's generics business reported revenues of $2.35 billion in 2006 in the $50-billion global market for generics. It is currently ranked among the top ten global suppliers in generics and has a range of more than 400 products across nearly all therapeutic areas.