Sun Pharmaceutical Industries and Ranbaxy Laboratories have entered into definitive agreements pursuant to which Sun Pharma will acquire 100 per cent of Ranbaxy in an all-stock transaction. Under these agreements, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy.
The combination of Sun Pharma and Ranbaxy creates the fifth-largest speciality generics company in the world and the largest pharmaceutical company in India. The combined entity will have operations in 65 countries, 47 manufacturing facilities across five continents, and a significant platform of speciality and generic products marketed globally, including 629 ANDAs. On a pro forma basis, the combined entity’s revenues are estimated at $4.2 billion with EBITDA of $1.2 billion for the twelve month period ended December 31, 2013. The transaction value implies a revenue multiple of 2.2 based on 12 months ended December 31, 2013.
Dilip Shanghvi, Managing Director, Sun Pharma said, “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.”
“We believe this transaction brings significant value to all Ranbaxy shareholders. Sun Pharma has a proven track record of creating significant long-term shareholder value and successfully integrating acquisitions into its growing portfolio of assets. We are confident that Sun Pharma is the ideal partner to help us realise our full potential and are excited to participate in future value creation opportunities,” stated Arun Sahwney, Managing Director and Chief Executive Officer, Ranbaxy.
Various industry leaders have given teh thumbs up to this buy out. GV Prasad, Chairman and Chief Executive Officer, Dr Reddys commented taht it was a great move by Sun Pharma and consistent with their strategy of acquiring distressed assets and turning them around.
V KrishnaKumar, Partner – Transaction Advisory Services (Lifesciences & Healthcare), EY, said, “The deal will create a domestic powerhouse with a combined market share in excess of nine per cent in the domestic branded formulations space. In addition to size/ scale benefits, the domestic portfolios of the two companies complement each other well. Sun’s domestic portfolio has a bias towards specialities (such as CVS, CNS and Oral Anti-diabetes), while Ranbaxy’s domestic portfolio has large primary-care and OTC segments as well.”
EP News Bureau – Mumbai
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