Suven Pharmaceuticals Limited and Cohance Lifesciences Limited on Thursday, announced a proposed scheme for the merger between the two companies. Cohance is a key player in the CDMO and Merchant API platform with global leadership in select low-mid volume molecules as well as unique capabilities in the form of its antibody drug conjugates (ADC) platform.
Their CDMO segment has grown at a healthy CAGR of around 30 percent over FY20-23 and contributes 44 percent to its Gross Profits for 9mFY24, the company said in a statement.
According to the press statement, this deal strengthens Suven’s CDMO industry leadership position with niche capability and scale benefits.
“Merger shall establish Suven’s position as a diversified CDMO and API leader in India, transcending our current revenue base. The merged entity is expected to be amongst the leading integrated CDMO players in India. With an expanded capacity to ~2,650 kL and a significantly broadened customer base, scale and synergy benefits are substantial,” the company said in a statement.
The also also stated that the deal will provide multiple engines of growth. Merged platform to comprise three distinct business units – Pharma CDMO, Spec Chem CDMO, and API+ (inclusive of formulations).
“The anticipated synergy benefits from our merger with Cohance are substantial. 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,” it added.
It also claimed that the deal will create significant value for shareholders through best-in-class financial metrics. Merged platform has best-in-class financial metrics: mid-30s EBITDA margins, 30%+ RoCE, sturdy cash flow generation over FY20-23.
“This is a transformative step in Suven’s journey of growth and building a respected 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,” Annaswamy Vaidheesh, Executive Chairman, Suven said in a statement.
Upon the scheme becoming effective, 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. The new shares of Suven so issued will be traded on the NSE and BSE. Advent entities shall own ~66.7 percent and the public shareholders will hold ~33.3% of the combined entity (pre-ESOP dilulion), it stated.
The overall transaction is expected to conclude over next 12-15 months subject to receipt of all relevant shareholder and regulatory approvals, it added.