Sun Pharma to acquire Ranbaxy in $3.2 billion all-share deal
Mumbai-based Sun Pharmaceutical Industries Ltd has confirmed that it will acquire beleaguered Ranbaxy Laboratories Ltd in a $3.2 billion all-stock deal.
Following its merger with Ranbaxy, Sun Pharma will become India's biggest pharmaceutical firm and the world's fifth biggest generic drugs maker.
Under terms of the agreement, Ranbaxy shareholders will get 0.8 of a Sun Pharma share for each share of Ranbaxy they own. Japan's Daiichi Sankyo Co Ltd, which currently owns 63.4 per cent stake in Ranbaxy, will own 9 per cent stake in the merged entity. The deal valued Ranbaxy stock at Rs 457 a share, which represents a premium of 18 per cent to the stock's thirty-day volume-weighted average price.
While many saw the deal as a signal of Daiichi's exit from the Indian market, Jefferies & Co analyst Naomi Kumagai said he would not call the move an exit.
Commenting on the deal, Kumagai said, "I wouldn't call this an exit. It's an ownership transfer. Another company will take over control for them of a place that had a lot of issues. In that sense, it should be a good thing."
Both companies have been dogged by several import warnings by the U. S. Food & Drug Administration (FDA). The U. S. FDA banned Ranbaxy from exporting drug ingredients produced at its various plants, including Toansa, to the U. S. Sun Pharma's Karkhadi plant has also been barred from exporting products to the highly lucrative U. S. market.
India's pharmaceutical industry, which is believed to be suffering due to lack of oversight and shortage of regulatory inspectors, accounts for more than 20 per cent of the world's total supply of generic drugs.