MARIGOWTHAM K

133057
Sun Pharma Ranbaxy Merger Deal
What is this deal?
On April 6
th
2014, Sun Pharmaceutical Industries Ltd has announced the acquisition of Ranbaxy
Laboratories Ltd for an all share deal of $4 billion. Ranbaxys assets worth $3.2 billion and has a
debt amounting to $800 million. With the presence in 65 countries and 47 manufacturing
facilities, the acquisition will make Sun Pharma the worlds fifth largest specialty generics and
the largest Indian pharmaceutical company.
Exchange Ratio
Sun Pharma offered Ranbaxy shareholders 0.8 shares for each Ranbaxy share. Thus the
exchange ratio makes up to Rs.457 for each Ranbaxy share. The value offered is 18% and
24.3% premium of Ranbaxys 30-day and 60-day weighted average share prices respectively.
Potential Synergies
There exists the scope for increase in revenue by crossing products between companies and
markets. The acquisition will ensure Sun Pharmas presence in India where the company was
number one in seven therapeutic segments before acquisition. And now it will be the first in 13
segments.
The deal will benefit Ranbaxy which struggles with its process quality and received a series of
warnings and approval withdrawals in the recent past from US Food and Drug Administration
marring its prospect for growth in the US market. Also, Sun Pharma too made a good deal
especially considering the price it paid for Ranbaxy.
Recent development
In a setback to merger process, the Andra Pradesh High Court on April 29
th
2014 ordered BSE
and NSE to maintain interim status quo on the matter. A writ petition was filed by some
individual investors alleging insider trading and requested the court to order an enquiry by SEBI,
the market regulator in India. The court issued notices to SEBI, NSE, BSE, Sun Pharma,
Ranbaxy, Daichii Sankyo and Silver Street Developers.
Source: http://www.ranbaxy.com/sun-pharma-to-acquire-ranbaxy-in-a-us4-billion-landmark-transaction/