India's Sun Pharma-Organon $10 bln deal strategic despite high leverage, say analysts

India's Sun Pharmaceutical SUN.NS has submitted a non-binding offer to acquire US-headquartered Organon OGN.N for $10 billion, Economic Times reported on Monday

Shares of SUN down 3% since Monday

Jefferies says the deal broadens Sun's global reach, therapy mix, manufacturing presence, and also marks entry into biosimilars

Adds, combined entity will double its revenue; however, it will also be highly levered at ~3.3x net debt/EBITDA at upper end of valuation

Potential deal's valuation mentioned in media reports does imply meaningful accretion for SUN earnings but the strategic rationale for the deal is key - BoFA

Analysts have a "buy" rating on avg; median PT is 1971.50 rupees - data compiled by LSEG

SUN down ~6% so far in January