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Mumbai-based Sun Pharma will acquire troubled Indian drug maker Ranbaxy in a $4 billion deal (Rs 24,000 crore at 60 rupees to the US dollar), the company said in a statement on Monday.

Sun Pharma said the transaction value includes $3.2 billion in stock and nearly $800 million of Ranbaxy debt.

The merger between the two companies will create India's largest pharmaceutical company and the world's fifth largest generics company.

Deven Choksey, managing director of domestic brokerage KR Choksey told NDTV that the deal is a win-win situation for Sun Pharma and Ranbaxy. The ANDA (abbreviated new drug application) pipeline of Ranbaxy is inspiring and given the ground reach of Ranbaxy, the combination will work in the generic business, he added.

"The track record of Sun Pharma, as far as acquisitions are concerned, has been good. Whenever they have acquired a company, they have been successful in turning it around," he said.

Ranbaxy, India's number one drugmaker by sales and 63.4 per cent held by Japan's Daiichi Sankyo, is banned from exporting drug ingredients to the United States, while Sun Pharmaceutical's Karkhadi plant is also barred from shipping products by the US Food and Drug Administration.

"Sun Pharma has the API (Active Pharmaceutical Ingredients) plant to supply material to Ranbaxy's US plant," Ramesh Adige, former executive director of Ranbaxy told NDTV.

Ranbaxy shareholders will receive 0.8 share of Sun Pharma for each share of Ranbaxy. The exchange ratio represents an implied value of Rs 457 for each Ranbaxy share.

Daiichi Sankyo, which bought Ranbaxy in 2008, will hold about 9 per cent stake in Sun Pharma after the deal.

Mr Adige says Daiichi has emerged as the only loser in the deal. They (Daiichi) must have thought that they can't settle the problems of this company (Ranbaxy) and it's better to go out now, he says. (Read full story)

Dilip Shanghvi, Managing Director of Sun Pharma said, "In high-growth emerging markets, it (Ranbaxy) provides a strong platform which is highly complementary to Sun Pharma's strengths. We see tremendous growth opportunities and are excited with the prospects to create lasting value for both our shareholders through a successful combination of our franchises."

Indian drugmakers are among the world's biggest producers of cheap generic medicines, but domestic firms have come under scrutiny amid quality and safety worries. India supplies medicines to more than 200 countries -- many in the emerging world -- and is the second largest supplier of drugs to the United States after Canada.

Ranbaxy shares were down over 5 per cent as of 12.30 p.m. The stock came under profit taking after rising 26 per cent over the last week. (Read the full story here)

Sun Pharma shares were up 1 per cent at Rs 577.30, outperforming the broader Nifty, which traded 0.5 per cent lower. (Track stock)

(With inputs from Reuters)