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Sun Pharma Said to Seek Takeover Financing, Eye Mea Deal

Sun Pharmaceutical Industries Chairman Dilip Shanghvi
Sun Pharmaceutical Industries Ltd. Chairman Dilip Shanghvi has been looking to expand in Europe as the company tries to extend its geographical reach. Photographer: Kuni Takahashi/Bloomberg

June 1 (Bloomberg) -- Sun Pharmaceutical Industries Ltd., India’s biggest drugmaker by market value, is raising financing for acquisitions, including for a possible takeover of Meda AB, two people with knowledge of the matter said.

Sun is talking with banks to arrange funding, said the people, who asked not to be identified because the process is confidential. The valuation and structure of a potential transaction have yet to be determined, they said. The process is at an early stage and may not lead to a deal, they said. Meda has a market value of 25.8 billion kronor ($3.89 billion).

Dilip Shanghvi, Sun’s billionaire founder, has been looking to expand in Europe as the company tries to extend its geographical reach. The Mumbai-based company last year considered buying German generic-drug maker Stada Arzneimittel AG, people with knowledge of the matter said at the time.

“If they can get it at a good valuation, Meda would be good for Sun,” said Bino Pathiparampil, an analyst at India Infoline Ltd. in Mumbai. “Meda is an innovator company with a strong branded innovator business. It’s a direction Sun has to move to move up the value chain from generics.”

Sun is also looking at other potential targets, said a third person with knowledge of the matter. Chairman Israel Makov said in an interview in January that the company wants to become a “major global player” in specialty pharmaceuticals, and is open to acquisitions in Europe.

Allergy Medicine

Buying Solna, Sweden-based Meda would bring Sun the Dymista allergy medicine, which was approved in the U.S. last year. Meda’s products, focused on respiratory, cardiology, dermatology, central-nervous-system, pain and inflammation treatments, generated sales of 12.99 billion kronor in 2012.

Mira Desai, a spokeswoman for Sun Pharma in Mumbai, declined to comment. Paula Treutiger, an investor-relations executive at Meda, and Anders Larnholt, vice president for corporate development, didn’t return calls seeking comment.

The Wall Street Journal reported earlier today that Sun and Meda are in talks.

Meda climbed 1.9 percent to close at 85.50 kronor yesterday in Stockholm, the highest close in more than five years. Sun fell 2.8 percent to close at 1,044.1 rupees, giving the company a market value of 1.08 trillion rupees ($19.1 billion). The stock has advanced 42 percent this year.

Olsson Family

A purchase of Meda probably would require the backing of Sweden’s Olsson family, which owns shipping, offshore-drilling, finance and property companies. The family owns more than 22 percent of Meda’s stock through its Stena Sessan AB holding company. Bert-Ake Eriksson, Stena Sessan’s CEO, is Meda’s chairman. Stena Sessan’s office referred questions to Eriksson and said he wasn’t available for comment.

Sun has announced six deals in the past five years, according to data compiled by Bloomberg. The company acquired DUSA Pharmaceuticals Inc. of Wilmington, Massachusetts, for about $230 million in December. In February, Sun ended a six-year effort to buy the remaining shares in Taro Pharmaceutical Industries Ltd. after shareholders held out for a higher price.

To contact the reporter on this story: Anto Antony in Mumbai at aantony1@bloomberg.net

To contact the editors responsible for this story: Phil Serafino at pserafino@bloomberg.net; Chitra Somayaji at csomayaji@bloomberg.net

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