Sun Pharma To Buy Ranbaxy In 4 Billion$ Deal
India’s Sun Pharma on Monday acquired struggling Gurgaon-based drug maker Ranbaxy Labrotaries owned by Japan's Diiachi Sankyo, for $4 billion in a deal that will make the new entity India's largest and the world's fifth largest drug maker.
Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy, Sun Pharma said, adding that revenue of the combined entity is expected to be $4.2 billion.
The all-stock transaction will give room to the company to make acquisitions with nearly $500 million net cash in its books. Promoters of Sun Pharma will hold close to 56% while Daiichi Sankyo will hold 9% stake in the combined entity.
Daiichi Sankyo had bought Ranbaxy Laboratories in 2008 for 4.6 Billion$.
With the acquisition, Sun Pharma has joined the league of leading multinational generics makers such as Teva, Actavis, Sandoz and Mylan.
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 abbreviated new drug applications (ANDAs).
"This is the biggest deal we have done, but not the most difficult one," said Sun Pharma chairman Dilip Shanghvi.
Following the acquisition, Ranbaxy brand will cease to exist and both the companies will be operated under one management. One representative of Diiachi Sankyo will be on the board of the combined company.
Ranbaxy, which has been battling regulatory issues for the past three years, has ceased to make profits. However, the expanse of the company's business across various regions including India made it an attractive distressed buyout target for Sun Pharma. "We hope that the company will turn profitable in a year or two," Shanghvi said.
Sun has said it will reshuffle the management after the merger, target $250 million by the third year of acquisition and implement remedial measures to tackle the regulatory issues with the US Food and Drug Administration. The company has said it will hire a third party consultant to develop plans to deal with these issues.
Diiachi Sankyo announced that the FDA has issued a subpoena to Ranbaxy's Toansa facility, which received an import alert last year. These issues will be handled by Sun Pharma in the future, the company said. However, in an interview with analyst firm Jefferies, the Japanese firm said it would be partially responsible for any potential payment to the US department of justice based on the ownership during the period when the issues were raised.
India’s Sun Pharma on Monday acquired struggling Gurgaon-based drug maker Ranbaxy Labrotaries owned by Japan's Diiachi Sankyo, for $4 billion in a deal that will make the new entity India's largest and the world's fifth largest drug maker.
Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy, Sun Pharma said, adding that revenue of the combined entity is expected to be $4.2 billion.
The all-stock transaction will give room to the company to make acquisitions with nearly $500 million net cash in its books. Promoters of Sun Pharma will hold close to 56% while Daiichi Sankyo will hold 9% stake in the combined entity.
Daiichi Sankyo had bought Ranbaxy Laboratories in 2008 for 4.6 Billion$.
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 abbreviated new drug applications (ANDAs).
"This is the biggest deal we have done, but not the most difficult one," said Sun Pharma chairman Dilip Shanghvi.
Following the acquisition, Ranbaxy brand will cease to exist and both the companies will be operated under one management. One representative of Diiachi Sankyo will be on the board of the combined company.
Ranbaxy, which has been battling regulatory issues for the past three years, has ceased to make profits. However, the expanse of the company's business across various regions including India made it an attractive distressed buyout target for Sun Pharma. "We hope that the company will turn profitable in a year or two," Shanghvi said.
Sun has said it will reshuffle the management after the merger, target $250 million by the third year of acquisition and implement remedial measures to tackle the regulatory issues with the US Food and Drug Administration. The company has said it will hire a third party consultant to develop plans to deal with these issues.
Diiachi Sankyo announced that the FDA has issued a subpoena to Ranbaxy's Toansa facility, which received an import alert last year. These issues will be handled by Sun Pharma in the future, the company said. However, in an interview with analyst firm Jefferies, the Japanese firm said it would be partially responsible for any potential payment to the US department of justice based on the ownership during the period when the issues were raised.
