Sun Pharmaceutical Industries will fully acquire troubled Ranbaxy Laboratories, in an all-stock transaction with a total equity value of $3.2 billion.
"Sun Pharmaceutical Industries Ltd and Ranbaxy Laboratories Ltd today announced that they have entered into definitive agreements pursuant to which Sun Pharma will acquire 100 per cent of Ranbaxy in an all-stock transaction," the two companies said in a statement.
Under these agreements, Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy.
The transaction has a total equity value of approximately $3.2 billion.
"This exchange ratio represents an implied value of Rs 457 for each Ranbaxy share, a premium of 18 per cent to Ranbaxy's 30-day volume-weighted average share price and a premium of 24.3 per cent to Ranbaxy's 60-day volume-weighted average share price, in each case, as of the close of business on April 4, 2014," it added.
The combination of Sun Pharma and Ranbaxy creates the fifth-largest specialty 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 5 continents, and a significant platform of specialty and generic products marketed globally, including 629 ANDAs.
On a pro forma basis, the combined entity's revenues are estimated at USD 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.