Sun Pharmaceutical Industries Ltd. announced an agreement to acquire Ranbaxy Laboratories Ltd in an all-stock transaction. The acquisition will create the fifth-largest specialty generics company in the world and the largest pharmaceutical company in India. The combined entity will have annual revenues of annual revenues of $4.2 billion, operations in 65 countries, 47 manufacturing facilities across five continents, and a platform of specialty and generic products marketed globally, including 629 ANDAs.
According to company statements and news reports, the transaction has a total equity value of approximately $3.2 billion, plus an additional $800 million in debt. Under the agreement, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. This exchange ratio represents a premium of 18% to Ranbaxy’s 30-day volume-weighted average share price and a premium of 24.3% to Ranbaxy’s 60-day volume-weighted average share price, in each case, as of the close of business on April 4, 2014.
Daiichi Sankyo currently holds 63.4% in Ranbaxy. Pursuant to the merger, Daiichi Sankyo will receive a stake of about 9% in the expanded Sun Pharma and will have the right to nominate one director to Sun Pharma’s Board of Directors.
The proposed transaction has been unanimously approved by the Boards of Directors of Sun Pharma, Ranbaxy, and Ranbaxy’s controlling shareholder, Daiichi Sankyo. Ranbaxy’s board and Sun Pharma’s board have recommended approval of the transaction to their respective shareholders, according to a Sun Pharma statement.
In March, Ranbaxy received a subpoena from the United States Attorney for the District of New Jersey requesting that Ranbaxy produce certain documents with respect to Ranbaxy's Toansa facility Form 483 was issued by FDA culminating into import alert. . The Toansa facility is subject to certain terms of Consent decree entered against Ranbaxy in January 2012.
In connection with the transaction, Daiichi Sankyo has agreed to indemnify Sun Pharma and Ranbaxy for, among other things, certain costs and expenses that may arise from the subpoena.
Sun Pharma anticipates that the transaction will close by the end of calendar year.