Mumbai-based Sun Pharma Industries Ltd, India’s largest pharmaceutical company by market capitalisation, has struck another large overseas acquisition to buy NASDAQ-listed dermatology company DUSA Pharmaceuticals, Inc., for $230 million in cash.
DUSA is focused on developing and marketing its Levulan(R) (aminolevulinic acid HCl) photodynamic therapy platform. Its Levulan combination therapy is approved by FDA for treatment of non-hyperkeratotic actinic keratoses or AKs of the face or scalp. Levulan is manufactured by DUSA in its FDA approved facility at Wilmington, MA.
Under the terms of the agreement, a 100 per cent subsidiary of Sun Pharmaceutical Industries Ltd will commence a tender offer for all of the outstanding common stock of DUSA at a price of $8 per share in cash, a 38 per cent premium to the closing price of DUSA's common stock on November 7.
The transaction has been approved by the boards of both companies and DUSA's board has recommended that the company's shareholders tender their shares pursuant to the tender offer.
Dilip Shanghvi, managing director of Sun Pharma , said, "DUSA has proven technical capabilities in photodynamic skin treatments, with USFDA-approved manufacturing. DUSA's business brings us an entry into dermatological treatment devices, where we see good growth opportunities."
Sun Pharma shares closed at Rs 696.15 a unit on the Bombay Stock Exchange on Thursday. The deal announcement was made after market hours.
DUSA clocked revenue of around $50 million for the twelve months ended June 30, 2012, with net income of $8.6 million. The deal values it over 26x its net income, much more than the multiples when Sun Pharma offered to buy out the remaining shares of Taro.
"We believe this transaction brings significant value to DUSA shareholders and are pleased that Sun Pharma recognised the value that has been created. The entire team at DUSA has built an excellent franchise around Levulan(R) PDT and continues to grow its presence in the dermatology space," stated Robert Doman, president and CEO of DUSA Pharmaceuticals, Inc.
The closing of the tender offer will be subject to certain conditions and upon the completion of the tender offer, Sun Pharma will acquire all remaining shares at the same price of $8 per share through a second-step merger.
Leerink Swann LLC acted as exclusive financial advisor and Reed Smith LLP acted as legal advisor to DUSA Pharmaceuticals.
The latest deal comes just three months after Sun Pharma reached an agreement to buy out the minority shareholders of New York Stock Exchange-listed Taro Pharmaceutical Industries and thereby take it private in a deal that would cost as much as $592 million. Coupled with Sun Pharma’s earlier investments in Taro, the deal translates into the largest acquisition by an Indian healthcare firm (within India or overseas) till date. This brought to an end a long-pending deal which had got stuck in legal tangles.
(Edited by Prem Udayabhanu)