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news.Sun Pharmaceutical has entered into definitive agreement to acquire Ranbaxy Laboratories in an all-stock transaction totalling equity value of $3.2bn.
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The boards of directors of Sun Pharma, Ranbaxy, and Daiichi Sankyo, which is Ranbaxy’s controlling shareholder, have unanimously approved the proposed transaction. Ranbaxy’s board and Sun Pharma’s board have recommended approval of the transaction to their respective shareholders.
Subject to customary closing conditions, the transaction is anticipated to close by the end of fiscal 2014.
Sun Pharma claims that the acquisition of Ranbaxy will make it the fifth-largest specialty generics company in the world and the largest pharmaceutical company in India.
This transaction also makes Sun Pharma as a leading pharmaceutical company in India with leadership position in 13 specialty segments and a leading Indian pharmaceutical company in the US.
The combined entity will have 47 manufacturing facilities in 65 countries across five continents. The transaction will combine Sun Pharma’s complex product capabilities with Ranbaxy’s global footprint, leading to significant value creation opportunities.
On a pro forma basis, the combined entity’s revenues are estimated at $4.2bn with EBITDA of $1.2bn for the 12 month period ended 31 December 2013.The transaction value implies a revenue multiple of 2.2 based on 12 months ended 31 December 2013.
Sun Pharma managing director Dilip Shanghvi noted that Ranbaxy has a significant presence in the Indian pharma market and in the US where it offers a broad portfolio of 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. We see tremendous growth opportunities and are excited with the prospects to create lasting value for both our shareholders through a successful combination of our franchises," Shanghvi added.
The combined business will have a strong portfolio of specialty and generic products marketed globally, including 445 ANDAs. Additionally, the combination will create one of the leading dermatology platforms in the US.
Sun Pharma anticipates realizing revenue and operating synergies of $250m by third year post closing of the transaction. After closing of the transaction, Daiichi Sankyo will become a significant shareholder of Sun Pharma and will have the right to nominate one director to Sun Pharma’s board of directors.
For Sun Pharma, Citi and Evercore are acting as financial advisors in this transaction, while Shearman & Sterling, Crawford Bayley and S. H. Bathiya & Associates as legal advisors.
ICICI Securities is acting as financial advisor for Ranbaxy in this transaction, while Luthra & Luthra Law Offices and Amarchand & Mangaldas & Suresh A Shroff & Co as legal advisors.
Goldman Sachs is acting as financial advisor for DaiichiSankyo in the transaction, while Davis Polk & Wardwell and Amarchand & Mangaldas & Suresh A Shroff & Co. as its legal advisors.