Ranbaxy likely to open higher on $3.2 billion deal with Sun Pharma

NEW DELHI: Ranbaxy Laboratories Ltd is likely to open higher on Monday after Sun Pharmaceuticals said that it will buy generic drug maker in an all-share deal with total equity value of $3.2 billion.

Shares of Sun Pharma closed 1.1 per cent lower at Rs 571.90 on Friday, while Ranbaxy Laboratories ended 8.1 per cent higher at Rs 459.55 on the Bombay Stock Exchange.

Ranbaxy (63.4 per cent held by Daiichi Sankyo Co Ltd) which is also India's No 1 drugmaker by sales was hit by regulatory snags in its key US market over quality issues.

The drugmaker was banned from exporting drug ingredients to the United States, while Sun Pharmaceutical's Karkhadi plant is also barred from shipping products by the US Food and Drug Administration.

"Sun Pharmaceutical said Ranbaxy shareholders will get 0.8 Sun Pharma shares for each Ranbaxy share. It added that the merged company will become the world's fifth-largest specialty generics company and the largest drug firm in India," Reuters reported.

"Daiichi Sankyo said in a statement that it will hold about a 9 per cent stake in Sun Pharmaceutical after the deal, which has been agreed to by the boards of both companies," added the report.