Sun Pharma Ltd - Finally SUN shines on Ranbaxy - Emkay

Reco: BUY
CMP: Rs 572
Target Price: Rs 719

- Sun Pharma announced that it has entered into a definitive agreement to acquire 100% of Ranbaxy for USD 4bn (EV/Sales valuation- ~2.2x LTM)

- All stock deal (14% equity dilution) with no stress on Sun's balance sheet; acquired debt and derivative losses could also be partially offset by FTF (gDiovan & gNexium) inflows

- Realizable synergies possible in each of the markets where the combined entity to be present. Sun becomes leader in derma in US and also gets access to controlled substances

- Combined FY16E sales of ~USD 5bn & PAT of USD 1.2bn to emerge as a Pharma mammoth. We are positive on the deal for Sun believing synergies could surprise in the long run.

Source : Equity Bulls

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