Strides Arcolab to buy Shasun Pharma for $200 million in all-stock deal

Strides Arcolab has agreed to buy smaller rival Shasun Pharmaceuticals in an all-stock deal, valued at about $200 million, to bolster its generic medicine and drug ingredient businesses.

Shasun, which has a market value of $193.5 million, makes drug ingredients and finished medicines, as well as provides contract research and manufacturing services. It supplies to North America, Europe, Asia and Latin America.

The acquisition is expected to close by June 2015, and is subject to regulatory approvals, the companies said in a stock exchange filing on Monday.

The deal is part of a consolidation in the pharmaceutical sector, which was expected to happen after Sun Pharmaceutical Industries agreed in April to buy local rival Ranbaxy Laboratories for $3.2 billion to create the world's fifth largest maker of generic drugs.

Under the terms of the deal, Shasun shareholders will get five Strides shares for every 16 held in Shasun, the companies said in a joint statement. That values Shasun at roughly $200 million based on the stocks' closing price on Friday.

The combined entity, in which Shasun shareholders will own 26 per cent, will have 12 manufacturing plants and a pipeline of over 100 products, said the statement.

In February last year, Strides sold its injectable drugs business to U.S. firm Mylan for $1.6 billion.

Shares in Strides rose as much as 12.8 per cent to 724 rupees after the deal announcement on Monday, while Shasun ended down 0.3 per cent at 196.15 rupees. The Nifty fell 0.1 per cent.

(Reuters)