Shares of Suven Pharmaceuticals Ltd will be in focus on Friday after the company announced a proposed scheme of amalgamation for the merger of Cohance Lifesciences with self. Suven Pharmaceuticals, whose shares are up 25 per cent in 2024 so far and 85 per cent in the last one year, said the new shares of Suven so issued would be traded on the NSE and BSE. Advent entities would own 66.7 per cent and the public shareholders would hold about 33.3 per cent in the combined entity (pre- ESOP dilution).
Merger swap ratio
All shareholders of Cohance will be issued shares of Suven at the ratio of 11 shares of Suven for every 295 shares of Cohance, based on the swap ratio.
Merger timeline
As far as the timeline is concerned, the overall transaction is expected to conclude over next 12-15 months subject to receipt of all relevant shareholder and regulatory approvals.
Merger benefits
On the revenue front, the limited customer overlap will help with cross-selling opportunities, leveraging Cohance's capabilities to reach Suven customers and vice versa, e.g. leverage ADC platform and lifecycle management of key molecules for Suven customers. On the costs side, the benefits would include sourcing materials through common vendors, cost optimisation across the platform, potentially lower investments in G&A as we leverage resources across the platform (vs standalone) and sharing of best practices across the platform.
Suven said the merged platform has mid-30s Ebitda margins, 30 per cent-plus RoCE and sturdy cash flow generation over FY20-23.
As per Suven, the merged platform will comprise three distinct business units – Pharma CDMO, Spec Chem CDMO, and API+ (inclusive of formulations). SUven said its integrated CDMO model would enable comprehensive molecule development and life cycle management for both pharmaceutical and specialty chemical partners.
Cohance’s addition, particularly its fast-growing ADC platform, would reinforce Suven's position as a leading CDMO platform enhancing offerings for our valued customers and partners, the company said.
"Addition of API+ business will primarily add select low-mid volume high value molecules, with leading global market share, backed by deep cost position and robust chemistry capabilities. It will also help scale our formulations business, supported by backward integration, that will help with optimal utilization of the capacities available," Suven said.
Management view
Annaswamy Vaidheesh, Executive Chairman, Suven said, said it is a transformative step for Suven towards building a integrated CDMO player. "We are extremely excited about the benefits of combined scale, capabilities, complementary customer base and best practices that will further help enhance our leadership position in India and globally”.
V Prasada Raju, Managing Director, Suven, said, “Our entire management team, spanning Suven and Cohance, is enthusiastic about shaping the future of the Pharmaceutical & Specialty Chemical landscape. The combination helps us drive multiple synergies both on revenue and cost front.”
Shweta Jalan, Board Member, Suven and Managing Partner & Head of Advent International in India, said, “Drawing inspiration from global peers with similar end-to-end capabilities, we are confident in our ability to scale globally”.
Pankaj Patwari, Board Member, Suven and Managing Director, Advent International said, “We are just starting on the integrated CDMO journey and are quite excited to build a global leader in the space. With this combination, we will have a solid base for each of our three engines and we will invest behind each one of them, both organically & inorganically, thereby consolidating the CDMO space”.