Dilip Shanghvi, the media-shy chief of India's most valuable drug maker Sun Pharmaceutical Industries, could be making his most audacious move yet.
According to a report in the Wall Street Journal, Sun is in talks to buy Swedish drugmaker Meda AB for about $5 billion (over Rs. 28,000 crore).
The Mumbai-based company — which makes drugs like AB Phylline, Aztor, Alzolam, Cardivas and Fibator, among dozens of others — is learnt to be negotiating a line of credit with a consortium of foreign and Indian banks.
If it goes through, this will be the third-largest overseas acquisition by an Indian company, after Tata Steel's $12.3-billion takeover of Corus in 2006 and the Aditya Vikram Birla Group's $6-billion buyout of US aluminiummaker Novelis the following year.
When contacted, a Sun Pharmaceutical spokesperson declined to comment, but the stock market seems to have got wind of the deal. The Sun Pharma stock was on the upswing through the entire week and hit a 52-week high of R1,085 on Thursday.
Analysts said the stock had moved up in anticipation of an announcement of a major acquisition.
"The company is earning a net profit of Rs. 1,000 crore every quarter. Given their strong balance sheet and cash flow, banks will be comfortable funding this acquisition," said Sarabjit Kour Nangra, vice-president, Angel Broking, a leading broking house.
Shanghvi, a first-generation entrepreneur, who promoted Sun Pharma in Kolkata in 1983, has a track record of taking over other drugmakers both in India and abroad.
Forbes has ranked him India's fourth-richest man, after Mukesh Ambani, Lakshmi Mittal and Azim Premji, with a net worth of $9.4 billion (Rs. 52.640 crore).
The $2-billion (Rs. 11,200-crore) Meda, which, like Sun, makes over the counter drugs and branded generics gets a large percentage of its sales from the US. About 50 per cent of Sun's turnover of Rs 11,300 crore comes from the US.