India's Sun Pharmaceutical Industries Ltd. is in talks to buy Swedish drugmaker Meda AB (MDABF, MDABY) in a potential deal worth about $5 billion, the Wall Street Journal reported Friday, citing people familiar with the matter.
According to the WSJ report, Sun Pharma is currently seeking letters of credit from banks to help fund the deal. The company, India's biggest drug maker by market value, has a market capitalization of more than $19 billion.
Sun Pharma recently acquired U.S.-based dermatology company Dusa Pharmaceuticals Inc. for about $230 million, and the generics business URL Pharma Inc. from Japan's Takeda Pharmaceutical Co. for an undisclosed amount.
In August 2012, Sun Pharmaceuticals, owning about 66 percent of the shares of Israel-based drug maker Taro Pharmaceutical Industries Ltd. (TARO), said it offered to buy the remaining shares of the company that it does not already own for $39.50 per share. However, the companies mutually agreed to terminate their merger deal in February 2013.
Dilip Shanghvi, Sun Pharma's billionaire founder and managing director, has been looking to expand in Europe to boost the company's geographical reach. Sun Pharma gets most of its sales from abroad, with the U.S. contributing more than half of its revenue. Last Tuesday, the company said that its sales for fiscal 2013 crossed the $2 billion mark.
Sweden's Meda makes respiratory, cardiology, dermatology as well as pain and inflammation drugs. In addition, the company makes over-the-counter treatments for warts and skin infections. The company recorded sales of nearly 13 billion Swedish kronor or $2 billion in fiscal 2012. Meda has a market capitalization of $3.8 billion.
An acquisition of Meda would give Sun Pharma access to Dymista, an allergy medicine that is seen as having good potential. However, the outcome of a deal is likely to hinge on the position of Sweden's Olsson family, which owns more than 22 percent of Meda's shares in addition to shipping, metal processing and property assets.
Other recent deals in the drug industry, which is seeing rapid consolidation, include the planned acquisition of Warner Chilcott Plc (WCRX) by Actavis Inc (ACT) in a deal valued at $8.5 billion, and Canadian drugmaker Valeant Pharmaceuticals International Inc's (VRX, VRX.TO) $8.7 billion acquisition of eye-care company Bausch & Lomb Inc.
MDABF closed Friday's trading at $13.23, up $0.93 or 7.57 percent on a volume of 1100 shares.
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