Sun-Ranbaxy merger clears last hurdle

Gets Punjab & Haryana High Court go-ahead; deal to close after brand dilutions

The $4-billion merger between Sun Pharmaceutical Industries and Ranbaxy Laboratories has crossed the final hurdle, with the Punjab & Haryana High Court giving approval.

Once the deal closes, expected this month, Sun will become the world’s fifth largest generic drug maker.

On January 31, the US Federal Trade Commission cleared the merger, following the  Competition Commission of India’s (CCI) conditional nod. CCI has asked both companies to divest seven drug assets in India as a pre-requisite. The process, it is learnt, is under way, with PricewaterhouseCoopers India as the consultant.

ASIA-PACIFIC’S LARGEST PHARMA DEAL

• CCI has given its conditional approval for the merger and asked both the firms to divest 7 drug assets in India as a pre-requisite for it
  

 

It is learnt PwC India is the consultant for it
 

CCI had asked Sun Pharma to divest all products containing tamsulosin & tolterodine
 

Ranbaxy was asked to divest the brands Terlibax, Rosuvas EZ, Raciper L, Terlibax, Triolvance and Olanex F
 

Once the deal deal closes, Sun will become the world’s fifth-largest generic drug maker

With this, brand Sun is ready to take charge, as Ranbaxy would fade away eventually in India. However, the company's sub-brands such as Volini or Revital will continue as they are, say its officials. Some of the markets abroad might retain the Ranbaxy brand for some time, Sun’s finance head, Uday Baldota, had recently told Business Standard.

After the announcement, shares of Ranbaxy closed 1.3 per cent higher on the BSE, at Rs 815.90. The Sun scrip closed marginally higher, by 0.4 per cent, at Rs 1,041.65 on the BSE.

CCI had asked Sun Pharma to divest all products containing tamsulosin and tolterodine, currently marketed and supplied under the Tamlet brand. Ranbaxy was asked to divest the Terlibax, Rosuvas EZ, Raciper L, Terlibax, Triolvance and Olanex F brands.

The all-share deal, largest in the Asia-Pacific region’s pharmaceutical sector, announced last year, is seen as a rare purchase of a local rival by a leading Indian company. The buyout is valued at $3.2 billion. As Sun Pharma will also take Ranbaxy’s debt of about $800 million on its books, the overall transaction value comes to $4 bn.

Ranbaxy shareholders will get 0.8 Sun Pharma shares for each Ranbaxy share held. The deal values Ranbaxy shares at Rs 457 apiece, a premium of 18 per cent to the 30-day volume-weighted average share price.

In 2008, Japan’s Daiichi Sankyo had acquired a 63.9 per cent stake in Ranbaxy for $4.2 bn. The value of its investment has halved since, as Daiichi hasn’t been able to ensure compliance with norms at Ranbaxy’s factories supplying drugs to the US.