- Sun Pharmaceutical Industries (SPL) announced that it would acquire 100 per cent of Ranbaxy Laboratories in a $4 billion all-share transaction, making this combined entity the 5th largest speciality generics company in the world, and the largest company in India with a command over 13 specialty segments, and largest Indian pharma company in the U.S. with over $2 billion sales and a pipeline of 184 ANDAs.
- The combine will have 65 countries, 47 manufacturing facilities across 5 continents, and a variety of specialty and drug products, including 629 ANDAs (Abbreviated new drug applications).
- The transaction, which is expected to close by December, 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. Daiichi Sankyo which holds 63.4 % in Ranbaxy to become the second largest shareholder in Sun and will have an independent director on Sun’s board. It will be EPS-accretive a year after.
- This synergistic transaction will reinforce their presence in important segments such as chronic therapy, acute care and OTC (over-the-counter) while strengthening their presence in US.
- The combined entity’s revenues estimated at $4.2 billion with operating profit of $1.2 billion for calendar 2013.
- Both companies will use their present infrastructure to sell each others’ products. Synergy benefits from the transaction, a large part of which will be derived from growth, procurement and supply chain efficiencies, are estimated at $250 million 3 years after its completion.
- The markets to immediately leverage are India, the U.S., followed by the emerging markets. Sun, which has sales of more than $100 million in South Africa, Russia and Romania, is looking to strengthen their position in Brazil and Malaysia.
- After opening the day at Rs.505, in afternoon trade, Ranbaxy shares slid 4.84 % to Rs.437.3 while Sun Pharma shares rose 1.21 % at Rs.578.8 on the BSE on Monday.