Sun Pharma Organon deal: $12bn funding options for 2026

What Sun Pharma is trying to finance

Sun Pharmaceutical Industries Ltd. has agreed to acquire New York-listed Organon & Co. in an all-cash transaction at an enterprise value of US$11.75 billion. Organon stockholders will receive US$ 14.00 per share in cash, under a definitive agreement announced by the two companies. The transaction has been approved by the boards of both Sun Pharma and Organon. It is expected to close in early 2027, subject to customary conditions, including regulatory approvals and Organon stockholder approval.

The size of the transaction has pushed lenders and the company to examine more than one way to raise long-term money. People familiar with the discussions said global lenders are weighing multiple financing options for the acquisition. The stated goal is to secure funding while preserving Sun Pharma’s credit profile.

Funding talks expand beyond a simple bridge loan

According to people familiar with the matter, Sun Pharma is considering seeking consent from Organon bondholders to swap their holdings into Sun Pharma debt. In parallel, the company is working on a potential euro-denominated bond. The euro bond could carry a credit rating one to two notches higher than the rating assigned to Organon before the proposed merger, the people said.

Separately, Sun Pharma is also planning to raise as much as US$3 billion to US$ 4 billion in offshore loans. The final funding may be a combination of these options, the people added. They also said the latest funding proposal may replace an earlier bridge loan facility that Sun Pharma was seeking.

Banks involved and what has been underwritten

At least three banks, Mitsubishi UFJ Financial Group Inc., JPMorgan Chase & Co., and Citigroup Inc., had committed to provide initial funding through a bridge facility, according to people familiar with the matter. Citigroup’s India chief executive K Balasubramanian said three banks including Citi have underwritten the acquisition facility. He added they will work with Sun over the next few months on aspects and milestones of the acquisition, including finalizing the long-term capital structure.

Sun Pharma, JPMorgan and MUFG did not immediately reply to Bloomberg’s emailed queries seeking comments, according to the report. The funding design remains in discussion, but the intention is to move from short-term bridge funding to a more durable capital structure.

How much cash Sun Pharma plans to use

In a presentation last month, Sun Pharma said it would use US$2 billion to US$ 2.5 billion from its cash reserves to help fund the acquisition. Another report on the transaction financing said Sun Pharma expects to deploy US$2 billion to US$ 2.5 billion from cash reserves, while the remaining US$9.25 billion to US$ 9.75 billion would be funded through committed bank financing.

Sun Pharma has described the acquisition financing as a mix of internal accruals and debt financing. One report added that despite the size of the deal, the company expects leverage to remain within manageable levels, with net debt-to-EBITDA estimated at 2.3 times for the combined entity.

Deal economics and valuation markers highlighted by the reports

The acquisition has been described as Sun Pharma’s biggest overseas deal to date and among the largest outbound acquisitions by an Indian drugmaker. Another report called it the largest overseas acquisition by an Indian pharmaceutical company, and the second biggest outbound deal by an Indian firm after Tata Steel’s acquisition of Corus in 2007.

Systematix analyst Vishal Manchanda was quoted as saying the proposed deal, valued around 6x EBITDA, appears financially disciplined and supported by steady cash flows. A separate report said the deal represents a premium of over 24% to Organon’s last closing price on April 24. Another report said the deal represents a 60% premium to Organon’s closing price on Jan. 16, before news of takeover interest emerged.

Strategic rationale: women’s health, biosimilars, and global reach

Organon was spun off in 2021 from Merck, known as MSD outside the US and Canada. One report said Organon brings a portfolio of over 70 products across women’s health, general medicines, and biosimilars, along with six manufacturing facilities worldwide. Another report said the acquisition would add exposure to over 140 markets, including China, and broaden Sun Pharma’s portfolio toward women’s health, biosimilars, and legacy brands.

Sun chairman Dilip Shanghvi was quoted as saying the company is debt-averse but not risk-averse, and that building biosimilars capabilities organically would take years while Organon provides a platform immediately. The same report said the deal positions Sun Pharma as a top-three player in women’s health, after German firms Merck and Bayer, and the seventh-largest biosimilars company in the world.

Market and investor lens: price moves and scale claims

A separate headline noted Sun Pharma was up 12% in four days and nearing a 52-week high. The reports also frame the transaction as transformative in scale. One claim stated that once completed, the acquisition would double Sun Pharma’s revenue to about US$12.4 billion and its EBITDA to about US$ 3.7 billion. The same report also said Sun Pharma’s M&A track record includes the Ranbaxy acquisition in 2014 and a series of in-licensing deals, and that it delivered a 14% revenue CAGR between FY10 and FY25.

While some reports discuss analysts seeing more upside, the financing plan and leverage targets are central to how investors may assess execution risk. The presence of underwritten facilities and the exploration of euro bonds, bond swaps, and offshore loans indicate a push to diversify funding sources.

Key numbers at a glance

What to watch next

The financing mix remains in flux, with discussions spanning bondholder consent solicitation, euro-denominated issuance, and offshore loans. Separately, the merger structure described by the companies involves Organon merging with a Sun Pharma subsidiary, with Organon surviving the merger. With closing tied to regulatory and shareholder approvals, investors will track progress on approvals and any final announcement on the long-term capital structure as the transaction moves toward its expected closing window in early 2027.