In a landmark transaction for the Indian pharmaceutical industry, Sun Pharmaceutical Industries (SPL) on Monday announced that it will acquire 100 per cent of Ranbaxy Laboratories in a $ 4 billion all-share transaction.
The transaction has a total equity value of $ 3.2 billion and a net debt of $ 800 million on Ranbaxy’s books will also be part of the transaction.
The combined entity will create the fifth-largest specialty generics company in the world and the largest pharmaceutical company in India with leadership in 13 specialty segments.
The combine will have operations in 65 countries, 47 manufacturing facilities across five continents and a swathe of specialty and generics products including 629 ANDAs (Abbreviated new drug applications). It will also become the largest Indian pharma company in USA with over $ 2 billion sales and a pipeline of 184 ANDAs.
Both companies said that they had entered definitive agreements under which Ranbaxy shareholders will receive 0.8 shares of Sun Pharma for every share of Ranbaxy. The exchange ratio represents a value of Rs 457 per share of Ranbaxy which is at an 18 per cent premium to the 30-day volume-weighted average share price and a premium of 24.3 per cent to Ranbaxy’s 60-day volume-weighted average share price as on April 4, 2014. The transaction is expected to close by December 2014 and will be EPS-accretive a year after.
The transaction has been approved by the Boards of Directors of both companies and Daiichi Sankyo which holds 63.4 per cent in Ranbaxy.
After opening the day at Rs 505, in afternoon trade, Ranbaxy shares slid 4.84 per cent to Rs 437.3 while Sun Pharma shares rose 1.21 per cent at Rs 578.8.
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