Business Daily from THE HINDU group of publications
Monday, May 28, 2007
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Business Daily from THE HINDU group of publications Monday, May 28, 2007 ePaper |
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Corporate
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Interview
D. Murali
Chennai May 27 Announced in the backdrop of multi-billion dollar deals such as Tata-Corus and Hindalco-Novelis acquisitions, the recently announced Sun Pharma transaction may not appear glamorous in value, design and shape. Yet, if viewed in the perspective of the international pharma landscape and the relative size of ambitious fast-growing Indian pharma companies, this acquisition is yet another testimony to the `Can Do' attitude of Indian corporates who aspire to globalise, says Mr Girish Vanvari, Executive Director, KPMG, Mumbai. The $454-million Sun Pharma-Taro deal is the second largest deal in the Indian pharma sector close behind the $565-billion buy-out of Betapharm by Dr Reddy's Lab, he adds. Here are Mr Vanvari's answers to a few quick questions from Business Line. Is the price right? If the stock market is a credible barometer of corporate decisions and if its initial reaction is a `thumbs up', clearly the acquisition price seems to be attractive. The bourses had reacted adversely initially to the Corus and Novelis deals. The Sun Pharma-Taro acquisition priced at $454 million is at a multiple of 1.5 year 2005 revenues. When compared with the Dr Reddy's-Betapharm transaction (2.9 times revenues) and Matrix-Docpharma transaction (2.3 times revenues), this acquisition appears to be attractively priced. On the structuring of the deal. Reports indicate that for the purpose of this transaction, Sun Pharma has/ will set up a 100 per cent subsidiary in Israel, which will ultimately be merged with the operating company in Israel. Further, the acquisition has been financed by internal accruals and convertible bonds issue raised in 2004. What is the prospect of further acquisitions in the pharma industry? The Indian pharma companies are already aggressively scouting for acquisitions in the global market. Reports indicate that Indian companies constituted the majority of bidders for the recently sold multi-billion dollar generics business of Merck. Indian companies have long realised that a major engine for future growth is the global generics business and in regular intervals one would hear of similar announcements. To go to think of it, Taro is the 14th acquisition of Sun Pharma, which also includes three overseas buys.
Related Stories: More Stories on : Interview | Mergers & Acquisitions | Pharmaceuticals | Sun Pharmaceutical Industries Ltd
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