FE had reported on March 14 that Ranbaxy and Lupin were the final shortlisted bidders for Terapia and that the deal would be closed by the end of March. Advent, which spent $44 million in a leveraged buyout to acquire Terapia in August, 2003, earned $280 million from the sale.
The Terapia acquisition, coupled with its own business in the country, makes Ranbaxy the largest generic drug manufacturer in Romania with revenues of around $100 million. This deal is the second largest acquisition in Indian pharma sector after Dr Reddys $570 million acquisition of Germanys betapharm Arzneimittel GmbH.
Analysts, however, consider the Ranbaxy-Terapia deal expensive. While the DRL buyout was valued at 2.92 times betapharms turnover, Ranbaxy has agreed to buy Terapia at 4.19 times its 2005 sales ($80 million). Says Shahina Mukadam, head of research, IDBI Capital Market, The price looks steep but is justified on EBITDA terms.
While Germanys over $25 billion pharma market is Europes biggest, Romanias $1.15 billion market is Europes fastest growing with 28% growth in 2005. Ranbaxy, however, sees Terapia as its window to the European markets. Ranbaxy stock closed 3.36% up at Rs 411.50 on the Bombay Stock Exchange.