The union cabinet has finally approved Japanese drugmaker Daiichi Sankyo's acquisition of Ranbaxy Laboratories, the country's largest drug firm, for as much as Rs21,560 crore ($4.58), finance minister P Chidambaram said.

''Daiichi Sankyo is now free to acquire Ranbaxy,'' Chidambaram said after a meeting of cabinet committee on economic affairs (CCEA).

Since the deal involved investments of over Rs600 crore it needed the approval of the CCEA. But the delay in the acquisition has cost Ranbaxy a whopping $445 million (Rs2,250 crore) while it has come as a blessing in disguise for the Japanese company.

Daiichi Sankyo, Japan's third largest drug firm, had, in June this year, agreed to buy the 34.8 per cent owned by Ranbaxy's chief executive officer Malvinder Singh and his family, and had followed it up with an offer for a further 20 per cent of Ranbaxy shares, as per SEBI regulations.

Had the deal been completed in 45 days (by end-July), the deal would have cost Daiichi around $5.07 billion in dollar terms.

The transaction would now cost Rs21,560 crore, which is equivalent to $4.58 billion at Rs47 per dollar.

The cabinet committee on economic affairs approved the transaction today when the dollar was at Rs 47, a sharp fall of 10.5 per cent.

The sharp depreciation of the Indian currency to above 47 a dollar has brought down the deal size by 10 per cent, giving a saving of $445 million or Rs2,250 crore to Daiichi.

Daiichi will also have to make an offer for 20 per cent in another Indian pharma company, Zenotech Laboratories, in which Ranbaxy owns 46.95 per cent equity, as part of the deal.

Daiichi Sankyo, which aims to complete the transaction by March, still needs approval of the Reserve Bank of India, Shigemichi Kondo, a company spokesman, said on Friday.