 "All-stock deal: India's Strides Arcolab to buy Shasun Pharma for $200 mn")
India’s Strides Arcolab Ltd has agreed to buy smaller rival Shasun Pharmaceuticals Ltd in an all-stock deal, valued at about $200 million, to bolster its generic medicine and drug ingredient businesses.
Shasun, which has a market value of $193.5 million, makes drug ingredients and finished medicines, as well as provides contract research and manufacturing services. It supplies to North America, Europe, Asia and Latin America.
The acquisition is expected to close by June 2015, and is subject to regulatory approvals, the companies said in a stock exchange filing on Monday.
The deal is part of a consolidation in the pharmaceutical sector, which was expected to happen after Sun Pharmaceutical Industries Ltd agreed in April to buy local rival Ranbaxy Laboratories Ltd for $3.2 billion to create the world’s fifth largest maker of generic drugs.
Arun Kumar, founder and group CEO, Strides Arcolab, told CNBC-TV18,“The strategic rationale for this transaction is fairly simple. This gives us integration which is now becoming very critical. We are aware we never have the Active Pharmaceutical Ingredients (API) capabilities in Strides. We were pure play dosage form player. This merger would potentially give us the integration which is crucial as we build portfolios and create capabilities around our institutional business as well.”
Under the terms of the deal, Shasun shareholders will get five Strides shares for every 16 held in Shasun, the companies said in a joint statement. That values Shasun at roughly $200 million based on the stocks’ closing price on Friday.
The combined entity, in which Shasun shareholders will own 26 percent, will have 12 manufacturing plants and a pipeline of over 100 products, said the statement.
In February last year, Strides sold its injectable drugs business to U.S. firm Mylan Inc for $1.6 billion.
Shares in Strides rose as much as 12.8 percent to Rs 724 after the deal announcement on Monday, while Shasun ended down 0.3 percent at Rs 196.15. The main Mumbai market index fell 0.1 percent.
Reuters
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