Sun Pharma in discussion to acquire controlling stake in Meda AB

Sun Pharmaceutical Industries is in discussions to acquire a controlling stake in Swedish drugmaker Meda AB  for around $5 billion, in a bid to boost its generics business in developed markets, Reuters reported citing two sources.

Meda produces over the counter drugs and branded generics – focused on the same segments as Sun Pharma.

Mumbai-based Sun Pharma had made a series of acquisitions in the past and has been in discussion with banks to raise funds for a possible deal, Reuters said.

With the intent for the acquisition having been signed, the due diligence process would get underway soon and could take anywhere between three to six months, according to one of the two investment bankers who did not wish to be identified, cited by The Wall Street Journal in a report  today.

According to the person, it might not be a 100 per cent acquisition, but would be a majority one, with the final deal value being around $3 billion to $3.5 billion.

According to the Journal, the Indian company wanted letters of credit from banks to present to Meda to convince board members that it could complete the deal.

Meanwhile, Meda was up the most in a year in Stockholm trading following the report in The Wall Street Journal.

Meda rose 3.4 per cent to 86.80 kronor at 1:45 pm, giving the company a market value of 26.2 billion kronor ($3.97 billion), with the stock gaining as much as 6.4 per cent, the biggest intraday advance since 9 May, 2012.

Sun, India's biggest drugmaker by market value, had been for expansion in Europe and the US in its bid to extend its geographical reach.

The acquisition of Meda would bring Sun the Dymista allergy medicine, which had been approved in the US last year.

The Swedish drugmaker's  products, focused on respiratory, cardiology, dermatology, central-nervous-system, pain and inflammation treatments, generated sales of 12.99 billion Swedish kronor in 2012.