Sun sets out $11.75bn takeover play for Organon
After downplaying persistent rumours for months, Sun Pharma has broken cover with an $11.75 billion takeover agreement for Organon, boosting its presence in the US market and the biosimilars category.
The $14-per-share deal for Organon – which was formed in 2021 as a spinout from MSD – will catapult India's Sun Pharma into the top 25 global pharma groups with combined annual revenues of around $12.4 billion, with a strong position in branded generics and other therapeutic areas like women's health.
It is pretty much a merger of equals, as last year both Sun Pharma and Organon recorded revenues of $6.2 billion. Rumours of a potential tie-up between the two groups started at the start of this year.
In a statement, Sun Pharma said that buying Organon will mark its entry into biosimilars as the seventh largest global player and also continue its strategy of growing its innovative, in-patent medicines business, currently represented by brands like psoriasis therapy Ilumya (tildrakizumab) and Odomzo (sonidegib) for skin cancer.
Shares in US-headquartered Organon, already inflated by the speculation about a potential merger, were trading at just below $13 on the NYSE at the time of writing, up 15% in pre-market trading, having already risen by almost a third on Friday ahead of yesterday's announcement. Shares in Sun Pharma were up nearly 7% on India's NSE exchange.
If concluded, the takeover will be the largest acquisition made by Sun Pharma since it took control of fellow Indian drugmaker Ranbaxy in a $4 billion transaction that was completed in 2015 and made it India's largest specialty generic pharma group.
The company has a history of accelerating growth with M&A deals, having earlier bought generic drugmakers Caraco Pharma of the US, fellow Indian company Ranbaxy, and Taro Pharma of Israel to expand its international footprint and extend its portfolio of generic medicines.
"This transaction is a logical next step in strengthening Sun Pharma's global business," said Sun Pharma's managing director, Kirti Ganorkar.
"Together, we will become a partner of choice for acquiring and launching new products," he added. "We see strong potential in leveraging Organon's talent pool [and] there is a scope for synergies including significant revenue upside opportunities to be realised over the coming years."
Sun Pharma plans to fund the acquisition – achieved by merging Organon with one of its subsidiaries – through a combination of cash and "committed financing from banks." It is targeting completion of the deal next year, depending on the usual shareholder and regulatory approvals.
Organon's chair, Carrie Cox, said that the Indian group "is well positioned to support Organon's businesses, employees, and patients globally, and to further advance our commitment to delivering impactful medicines and solutions."
Photo by Alan Aprilio on Unsplash
