Sun Pharma to acquire Ranbaxy for $3.2 bn

Sun Pharma to acquire Ranbaxy for $3.2 bn

 Drug major Sun Pharmaceutical Industries said on Monday it would acquire Daiichi Sankyo-owned Ranbaxy Laboratories in an all-stock transaction totalling equity value of $3.2 billion.

After taking Ranbaxy’s debt into account, this transaction is worth over $4 billion. The deal between the two companies — both having been  pulled up by the US Food and Drug Administration (USFDA) over quality issues — will create the world’s fifth-largest generic drugmaker entity.

“Ranbaxy has a significant presence in the Indian pharma market and in the US where it offers a broad portfolio of abbreviated new drug applications (ANDAs) and first-to-file opportunities. In high-growth emerging markets, it provides a strong platform which is highly complementary to Sun Pharma’s strengths,” Dilip Shanghvi, Managing Director of Sun Pharma said in a statement.

Under the terms of the agreements, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. Daiichi Sankyo, the Japanese owner of India’s biggest drugmaker by sales, will hold a stake of about 9 per cent in Sun Pharmaceutical Industries Ltd after the deal. The deal values Ranbaxy shares at Rs 457 apiece, representing an 18 per cent premium to its 30-day volume-weighted average share price on April 4, 2014.

The combination of Sun Pharma and Ranbaxy will create the largest pharmaceutical company in India. Sun Pharma expects to realise revenue and operating synergies of $250 million by third year post closing of the transaction.

The combined entity will have operations in 65 countries, 47 manufacturing facilities across five continents, and a significant platform of specialty and generic products marketed globally, including 629 ANDAs.

“On a pro forma basis, the combined entity’s revenues are estimated at $4.2 billion with EBITDA of $1.2 billion for the 12-month period ended December 31, 2013. The transaction value implies a revenue multiple of 2.2 based on 12 months ended December 31, 2013,” Sun Pharma added.

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