Mid-cap biotech Organon to be acquired by Sun Pharma; shares soar to one-year high

Shares of Organon, the mid-cap maker of women’s health drugs, surged nearly 17% on Monday to mark a one-year high. The company announced it will be acquired at a premium by India’s Sun Pharmaceutical Industries.

Organon shares jumped nearly 17% on Monday to $13.16 per share – exactly where the stock closed on April 29 of last year, before beginning a prolonged decline.

The company said it will be acquired by major Indian drugmaker Sun Pharma for $14 per share in cash. The offer represents a 103% premium to Organon’s share price on April 9, the day before media reports first surfaced about a potential acquisition, according to the press release.

The transaction is valued at $11.75 billion. Organon had a market capitalization of $3.43 billion and debt of $8.64 billion as of December 31.

The boards of both companies have already approved the deal, and the parties are now awaiting approval from Organon shareholders and regulators. The transaction is expected to close in early 2027. Following the merger, Sun Pharma, with combined revenue of $12.4 billion, is expected to rank among the world’s top 25 pharmaceutical companies, according to the statement.

Organon is a relatively young company. It was spun off from Merck in 2021 – the company operates under the MSD brand outside the U.S. and Canada – and specializes in drugs for reproductive health, contraception, and fertility treatment. Its portfolio also includes medicines for dermatological, neurological, and cardiovascular conditions.

Reports about a potential transaction first emerged in late January, when sources cited by India’s Economic Times said Sun Pharma had made a nonbinding offer for Organon. In April, the publication’s sources said the Indian drugmaker was preparing a binding offer. They also said two other consortiums were interested in acquiring Organon. Neither company commented publicly on the reports.

The deal follows a corporate scandal at Organon. In October, the company announced the resignation of CEO Kevin Ali after an internal investigation by the board uncovered improper sales practices involving the company’s Nexplanon contraceptive implant among certain wholesalers. Customers purchased more product than they needed, helping the company meet internal targets. The board said the practice was improper, but added that no restatement of financial statements was required. Organon shares plunged nearly 24% on the day the press release was published.

Organon shares have surged 84% year to date. Three Wall Street analysts rate the stock “hold,” three “sell,” and only one "buy." The average target price stands at $10.40 per share, below the current share price.