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biotech/news//The Economic Times
Lenders are exploring various financing options for Sun Pharmaceutical Industries' proposed $12 billion acquisition of Organon & Co. The Indian drugmaker is considering swapping Organon bondholders into Sun Pharma debt and a potential euro-denominated bond.
Sun Pharma is considering a bondholder swap, exchanging Organon bondholders into Sun Pharma debt.
KEY POINTS
A euro-denominated bond with a higher credit rating than Organon's is under discussion for funding.
Sun Pharma plans to raise $3 billion to $4 billion through offshore loans for the Organon acquisition.
The proposed financing may replace an earlier bridge loan previously sought by Sun Pharma.
Deal approvals for the $12 billion acquisition are anticipated by December.
Synopsis
Global lenders are exploring various financing options for Sun Pharmaceutical Industries' proposed $12 billion acquisition of Organon & Co. The Indian drugmaker is considering swapping Organon bondholders into Sun Pharma debt and a potential euro-denominated bond. Additionally, Sun Pharma plans to raise $3 billion to $4 billion in offshore loans, with deal approvals anticipated by December.
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Global lenders to Sun Pharmaceutical Industries Ltd. are weighing multiple financing options for its proposed $12 billion acquisition of New York-listed healthcare company Organon & Co., according to people familiar with the matter.
The Indian drugmaker is considering seeking consent from Organon bondholders to swap their holdings into Sun Pharma debt, the people said, asking not to be identified discussing private matters. It is also working on a potential euro-denominated bond that could carry a credit rating one to two notches higher than the one assigned to Organon before the proposed merger, they added.
Also read: Sun Pharma to acquire Organon for $11.75 billion in India’s biggest pharma deal
Separately, the company is planning to raise as much as $3 billion to $4 billion in offshore loans, the people said, adding that the deal is expected to get necessary approvals by December. The final funding could be a combination of all options, they said.
The discussions highlight the scale of the deal, which would rank among the largest outbound acquisitions by an Indian drugmaker and aims to secure funding while preserving Sun Pharma’s credit profile. The latest funding proposal may replace an earlier bridge loan facility that Sun Pharma was seeking, the people said.
At least three banks — Mitsubishi UFJ Financial Group Inc., JPMorgan Chase & Co. and Citigroup Inc. — had committed to provide initial funding through a bridge facility, the people said.
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Also read: ET Exclusive | Sun Pharma set to acquire Organon for $12.5 bn, its biggest till date
“Currently, three banks including Citi have underwritten the acquisition facility and will work with Sun extensively over next few months on multiple aspects and milestones of the acquisition including finalizing the long-term capital structure,” K Balasubramanian, CEO of Citi India and banking head of Indian subcontinent, said.
Sun Pharma, JPMorgan and MUFG did not immediately reply to Bloomberg’s e-mailed queries seeking comments.
In a presentation last month, Sun Pharma said it would use $2 billion to $2.5 billion from its cash reserves to help fund the acquisition.
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