- Sun Pharma expects $350 million in cost synergies from Organon acquisition within 2-4 years
- Acquisition aims to expand Organon's innovative, biosimilars, and established product segments
- Sun Pharma plans to use $2-2.5 billion cash and $9.25-9.75 billion debt to finance the deal
Sun Pharmaceuticals Ltd. appears to be confident about its acquisition of Organon and expects to unlock substantial value, projecting cost synergies of approximately $350 million over the next two to four years.
In an interview with NDTV Profit, Sun Pharma's Managing Director Kirti Ganorkar acknowledged the currently challenging market environment, inflicted by the ripples of the Iran war, but at the same time emphasised that successfully driving growth and generating synergies will validate the deal.
He outlined that the acquisition is expected to fuel expansion across all three of Organon's core segments— innovative, biosimilars, and established products— bolstered by significant sales synergies. However, the management has currently not set a timeline for achieving a higher single digit growth for Organon.
According to Chief Financial Officer Jayashree Satagopan, the financial strategy for the acquisition relies heavily on robust cash flows. Satagopan highlighted that the combined entities currently generate about $2.5 billion in cash, a figure expected to rise as cost savings and growth opportunities materialise.
Further, she said to finance the transaction, Sun Pharma will deploy $2 billion to $2.5 billion from its $3.1 billion cash surplus, alongside external borrowing of $9.25 billion to $9.75 billion.
ALSO READ: Sun Pharma Shares Jump After Organon Acquisition Deal; Top Gainer On Nifty 50
Notably, Sun Pharmaceutical on Monday announced the acquisition of New York-listed Organon in an all‑cash
transaction with an enterprise valuation of $11.75 billion. The Indian drugmaker will buy all outstanding shares for $14 per share in cash, or approximately $3.99 billion in total equity value, according to a stock exchange filing.
"The proposed acquisition of Organon is aligned with Sun Pharma's strategy of growing its Innovative Medicines business. The combined company becomes a stronger player in Established Brands/Branded Generics business. Organon's portfolio, global footprint and strong stakeholder relationships shall complement Sun Pharma's existing strengths and enhance long‑term value creation," a statement said.
The acquisition is expected to be completed in early 2027, subject to customary conditions, including regulatory approvals and Organon stockholder approval.
Shares of Sun Pharma closed 6.83% higher at Rs 1,731 apiece on the NSE, compared to a 0.81% climb in the benchmark Nifty 50.
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