Sun Pharma's Organon Acquisition Takes Shape After Three Months of Intense Negotiations

Sun Pharmaceutical Industries Acquires Organon & Co for $11.75 Billion

Mumbai: In a significant move, Sun Pharmaceutical Industries Ltd, a Mumbai-based pharmaceutical company, has announced its acquisition of US-headquartered Organon & Co for approximately $11.75 billion. This deal marks the largest overseas acquisition by an Indian company since Tata Steel acquired UK-based Corus Group for $12 billion in 2007.

The acquisition was negotiated over a period of three months, with near-daily negotiations between the bidder, the seller, and their bankers. According to a banker aware of the details behind the transaction, the deal was always pitched at around $12 billion from both sides, with negotiations neither exceeding nor materially falling from that level.

The acquisition will provide Sun Pharma with access to more than 100 countries across the world, complementing its product suite and helping it get a further boost on women's health. The deal will also enter Sun Pharma into biosimilars among the top 10 players globally and make it one of the top 25 pharmaceutical companies, with combined revenue of about $12.4 billion, double its $6.2 billion revenue in FY25.

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The acquisition will require regulatory approvals across multiple jurisdictions, including China, and could take four to five months. The deal was negotiated by Sun Pharma's founder and executive chairman Dilip Shanghvi, along with long-term company insider Sanjay Jerry.

The financing for the deal will be provided through $2-2.5 billion in cash and committed bank financing of $9.25-9.75 billion. Sun Pharma will also assume Organon's debt of about $8.6 billion. The company may not draw the entire loan, as it assesses how much debt to raise based on available cash and potential consent from existing bondholders.

Organon was spun off from Merck in 2021, housing its women's health, legacy general medicine brands, and biosimilars businesses. With the acquisition, Sun Pharma will become an investment-grade company, making existing bondholders happy to swap their bonds from the target to Sun.

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The acquisition will be funded through a US dollar financing commitment, which is well-priced compared to similar transactions of this size and scale. The final structure of the deal has not yet been decided, and the company will reassess its debt raise based on available cash and potential consent from existing bondholders.