India's Sun Pharma said it has agreed to buy Israeli generic drug maker Taro for USD 454 million to help boost its sales in markets such as the United States, sending its shares up 4.5 per cent.
Taro Pharmaceutical Industries, which gets 90 per cent of its sales from North America, will help widen Sun's presence in dermatology and pediatrics segments, Sun Chairman and Managing Director Dilip Shanghvi said in a conference call.
Sun Pharmaceutical Industries Ltd, India's biggest drug maker with a market value of nearly USD 5 billion, has been scouting for opportunities globally to expand its generics offering.
The Indian firm agreed to pay USD 7.75 per share, up 27 per cent from Friday's close of USD 6.10, valuing Taro's equity at USD 230 million, Sun said in a statement.
The remainder of USD 224 million will go towards refinancing Taro's debt.
Two minority shareholders have moved an Israeli court to restrain Taro from concluding any deal that could hurt minority interests, Sun said, but it was hopeful of overcoming the hurdle.
Sun aims to fund the deal from internal cash and through a USD 350 million it had raised in convertible bonds earlier.
Taro was expected to post a "substantial loss for the year ended December 2006", Sun said, but it expected to turn it around.
"It should become EPS (earnings per share) accretive within 12-18 months," Shanghvi told television channel CNBC-TV 18.
The Israeli firm had reported an annual profit of USD 5.7 million and sales of USD 298 million for 2005.
"The company's focus is obviously to enhance the size and scale of generics," said Sarabjit Kaur Nangra, a sector analyst at Angel Broking Ltd.
"In that sense, this is in line with earlier acquisitions. Sun Pharma has always been looking at acquiring companies wherein there is an opportunity for them to turnaround," she said.
The company has a bigger market value than rivals Cipla Ltd's USD 4 billion, Ranbaxy Laboratories Ltd's USD 3.6 billion and Dr Reddy's Laboratories Ltd's USD 2.75 billion.
Minority Tussle
Franklin Advisers Inc and Templeton Assets Management Ltd, which together own 9 per cent of Taro, have filed a case in a Tel-Aviv court, seeking to prevent any transaction by Taro that could hurt minority shareholders, Sun said.
Sanghvi said it was paying the same price to Taro's founders and other shareholders and there was no discrimination against minority interests.
"We believe that the litigation of Franklin Templeton does not have any merit, and so the company should be able to get judgment in its favour," he said.
A ruling on the case is expected later on Monday, he added.
When completed it will be Sun's 14th acquisition since it bought US-based Caraco in 1997, a company spokesman said.
Courtesy : Expressindia.com
Taro Pharmaceutical Industries, which gets 90 per cent of its sales from North America, will help widen Sun's presence in dermatology and pediatrics segments, Sun Chairman and Managing Director Dilip Shanghvi said in a conference call.
Sun Pharmaceutical Industries Ltd, India's biggest drug maker with a market value of nearly USD 5 billion, has been scouting for opportunities globally to expand its generics offering.
The Indian firm agreed to pay USD 7.75 per share, up 27 per cent from Friday's close of USD 6.10, valuing Taro's equity at USD 230 million, Sun said in a statement.
The remainder of USD 224 million will go towards refinancing Taro's debt.
Two minority shareholders have moved an Israeli court to restrain Taro from concluding any deal that could hurt minority interests, Sun said, but it was hopeful of overcoming the hurdle.
Sun aims to fund the deal from internal cash and through a USD 350 million it had raised in convertible bonds earlier.
Taro was expected to post a "substantial loss for the year ended December 2006", Sun said, but it expected to turn it around.
"It should become EPS (earnings per share) accretive within 12-18 months," Shanghvi told television channel CNBC-TV 18.
The Israeli firm had reported an annual profit of USD 5.7 million and sales of USD 298 million for 2005.
"The company's focus is obviously to enhance the size and scale of generics," said Sarabjit Kaur Nangra, a sector analyst at Angel Broking Ltd.
"In that sense, this is in line with earlier acquisitions. Sun Pharma has always been looking at acquiring companies wherein there is an opportunity for them to turnaround," she said.
The company has a bigger market value than rivals Cipla Ltd's USD 4 billion, Ranbaxy Laboratories Ltd's USD 3.6 billion and Dr Reddy's Laboratories Ltd's USD 2.75 billion.
Minority Tussle
Franklin Advisers Inc and Templeton Assets Management Ltd, which together own 9 per cent of Taro, have filed a case in a Tel-Aviv court, seeking to prevent any transaction by Taro that could hurt minority shareholders, Sun said.
Sanghvi said it was paying the same price to Taro's founders and other shareholders and there was no discrimination against minority interests.
"We believe that the litigation of Franklin Templeton does not have any merit, and so the company should be able to get judgment in its favour," he said.
A ruling on the case is expected later on Monday, he added.
When completed it will be Sun's 14th acquisition since it bought US-based Caraco in 1997, a company spokesman said.
Courtesy : Expressindia.com