- 29 May 2023
- ICICI Securities
Sun Pharma to completely buy out Taro Pharma
SUNPHARMA - 1520 Change: 34.40 (2.32 %)News: Sun Pharma has proposed to acquire 100% stake in Taro Pharma in the form of a reverse merger. Post this deal Taro will become a wholly owned subsidiary of Sun Pharma. Sun Pharma has offered the shareholders the price of US$38.
Views: Assuming full response to the buyout proposal, back of the envelope calculation suggests that Sun will have to pay ~US$308 million for 8.09 million minority shares (21.52%) @ US$38 per share. Hence, the likely treasury loss would be US$12.32 million (Rs 100 crore pre-tax). On the other hand, there will be saving on the minority interest outgo, which was at Rs 39 crore for FY23. That said, we need to wait for the response as buy-out attempts by Sun in the past have failed to convince Taro's minority shareholders. PE backed IndiaRF fund is in discussion with Ivy Hospital to acquire controlling stake (51%) in the company. The bed capacity stands at 1100 beds and the valuation quoted is around Rs 1000 crore. The revenues as on FY22 were at Rs 368 crore with profit of Rs 48 crore.
Impact: Neutral