Sun-Ranbaxy Deal Gets Final CCI Nod; Emcure To Buy 7 Brands

NEW DELHI: Sun Pharma and Ranbaxy  have got approval from the Competition Commission for sale of seven brands to Emcure Pharma to comply with the fair trade watchdog's conditional nod for their $4-billion merger.

In an order issued, CCI also approved the deal with Emcure, which would purchase the 'divestment products' that were ordered to be sold in an earlier direction issued in December last by the Competition Commission of India (CCI).

These seven brands were at the core of the CCI's contention that the merger between Sun Pharmaceutical Industries and Ranbaxy Laboratories was 'prima-facie' in violation of competition laws and therefore the regulator had ordered divestment of those products under its 'conditional' approval to the deal.

 Despite sale of these products, the merger would create India's largest and the world's fifth largest drugmaker. The 'conditional' approval was given by CCI on December 5, 2014 after a public scrutiny of the deal. Consequently, the two companies were asked to identify a purchaser for the seven brands to be divested.

As per the CCI order, Sun and Ranbaxy last month proposed to CCI that Emcure Pharmaceuticals Limited would purchase all 7 divestment products, following which the companies were asked to provide some further details and clarifications. CCI had also appointed PwC as a monitoring agency for the divestment process. "The Commission considered the reports submitted by the Monitoring Agency and the Proposal along with all information submitted by the parties and Emcure, in order to assess whether Emcure meets the requirements laid down in the order and whether the APA (Asset Purchase Agreement) and the SA (Supply Agreement) proposed to be entered into by the Parties and Emcure, are in accordance with the provisions of the Order," CCI said.

The regulator said that it has found Emcure to be "a company active in the sales and marketing of pharmaceutical products in the India and has the financial resources, proven expertise, manufacturing capability or ability to outsource manufacturing and incentive to maintain and develop the Divestment Products, as a viable and active competitor to the Parties in the relevant market". Accordingly, CCI has approved "Emcure as the Approved Purchaser of the Divestment Products".

 In December, CCI had directed Sun Pharma to divest all products containing 'Tamsulosin + Tolterodine' which are marketed and supplied under the Tamlet brand name. Similarly, Ranbaxy was directed to divest all products containing Leuprorelin which are marketed and supplied under the Eligard brand name. It also had to divest products such as Terlibax, Rosuvas EZ, Olanex F, Raciper L and Triolvance.

In April, 2014, Sun Pharma had announced it would acquire troubled rival Ranbaxy in a $4-billion deal that includes $800 million debt. Shasun Pharma stock price On March 24, 2015, at 15:09 hrs Shasun Pharmaceuticals was quoting at 353.05, up 8.65, or 2.51 percent. The 52-week high of the share was 391.50 and the 52-week low was 67.70.

The company's trailing 12-month (TTM) EPS was at 7.57 per share as per the quarter ended December 2014. The stock's price-to-earnings (P/E) ratio was 46.64. The latest book value of the company is 52.55 per share. At current value, the price-to-book value of the company is 6.72.

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