[Ip-health] WSJ: India's Sun Pharmaceuticals Readies $5 Billion Deal for Sweden's Meda

Thirukumaran Balasubramaniam thiru at keionline.org
Fri May 31 05:58:09 PDT 2013

	• May 31, 2013, 7:17 a.m. ET

India's Sun Pharmaceuticals Readies $5 Billion Deal for Sweden's Meda

India's Sun Pharmaceutical Industries Ltd. 524715.BY -2.80% is in talks to acquire Swedish drug maker Meda AB, MEDA-A.SK +3.57% people familiar with the matter said, a deal that could be worth nearly $5 billion.

Mumbai-based Sun, India's largest drug maker, has been canvassing banks to help line up funding for such a deal, people familiar with the matter said. Sun is currently seeking letters of credit from banks and will present those to Meda's board to convince it of Sun's ability to go through with the deal, one of the people said. A spokesman for Sun declined to comment. Meda didn't return calls seeking comment.

Sun's effort to strike a deal comes at a time of rapid consolidation among midsize pharmaceutical companies around the world, which are seeking greater scale and product breadth amid fierce competition and pricing pressure.

Canada's Valeant Pharmaceuticals International Inc. VRX.T -0.23% agreed to a $4.5 billion deal to buy eye-products maker Bausch & Lomb earlier this week, fending off what people familiar with the matter said was an 11th-hour rival offer from Sun. That followed specialty drug maker Warner Chilcott WCRX +1.85% PLC's agreement just days earlier to be bought by Actavis Inc. ACT +1.31% for around $5 billion. Sun has also been acquisitive lately, particularly in the U.S., where it bought DUSA Pharmaceuticals, a dermatology company, in November, and the generics business URL Pharma Inc., in December.

Sun already gets most of its sales from abroad, with India contributing just around a quarter of its total revenue, while the U.S. contributes more than half. The 30-year old specialty drug company makes remedies in areas including neurology and cardiology. Its stock currently trades at record levels in India, giving it a market value of more than $15 billion, as the firm on Tuesday reported that sales crossed the $2 billion mark in the financial year ending March 31. That is double what sales were just a few years ago. Its founder and managing director, Dilip Shanghvi, is now India's fourth-richest man, according to Forbes.

Meda makes respiratory, cardiology, dermatology and pain and inflammation drugs. It also makes over-the-counter products which treat warts, skin infections and other maladies that account for roughly one-quarter of its revenue. Last year, the company had sales of nearly 13 billion Swedish kronor ($1.98 billion). Meda has a market value of roughly 25 billion kronor in Stockholm, meaning that with a typical takeover premium of 25% to 30%, it could be worth between $4.5 billion and $5 billion.

Most of Meda's branded generics are sold in the U.S., which is attractive to Sun, one of the people said.

The Olsson family of Sweden, which owns a collection of shipping and other assets, holds roughly a fifth of Meda's shares and would likely have to be a willing seller for any deal to happen. A representative for the family couldn't immediately be reached for comment.

Should Sun succeed in acquiring Meda, it would rank among the five biggest Indian outbound deals on record, according to Dealogic. It would also be one of just a handful of multibillion-dollar outbound deals from Asia, excluding Japan, thus far this year.

Write to Cynthia Koons at cynthia.koons at wsj.com, Kenan Machado atkenan.machado at wsj.com and Dana Cimilluca at dana.cimilluca at wsj.com


Thiru Balasubramaniam
Geneva Representative
Knowledge Ecology International (KEI)

thiru at keionline.org

Tel: +41 22 791 6727
Mobile: +41 76 508 0997

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