The ratings of Sun Pharmaceutical Industries (Sun Pharma; rated 'CRISIL AAA/Stable/CRISIL A1+') and Ranbaxy Laboratories (Ranbaxy; rated 'CRISIL A1+') will remain unaffected by Sun Pharma's announcement of its proposal to acquire a 100% stake in Ranbaxy, subject to obtaining regulatory approvals. The deal is valued at an enterprise value of USD 4 billion, on an all-stock transaction. Under the agreement, Ranbaxy shareholders are to receive 0.8 of a Sun Pharma share for each share of Ranbaxy.

CRISIL believes that the proposed acquisition will not impact the credit risk profiles of either Sun Pharma or Ranbaxy, as the combined entity will continue to have strong business and financial risk profiles.

The Sun Pharma-Ranbaxy combine will be the fifth largest global specialty generic pharma company, and India's largest formulation company. The combined entity will have a diversified presence across therapeutic segments in India’s formulation market. Ranbaxy's strong presence in the emerging markets will result in a higher geographically diversified revenue profile for the combined entity. The combined entity is expected to maintain a strong financial risk profile, backed by strong cash flows, low gearing, strong debt protection metrics, and sound financial flexibility.

Shares of Sun Pharmaceutical Industries gained Rs 15.35, or 2.68%, to settle at Rs 587.25. The total volume of shares traded was 437,933 at the BSE (Monday).