Suven Pharma soars 13% on announcing merger of Cohance Lifesciences

Shares of Suven Pharmaceuticals soared 13 per cent to Rs 712 on the BSE in Friday's intra-day trade after the company announced a proposed scheme of amalgamation for the merger of Cohance Lifesciences (Cohance) with the company.

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.

At 11:37 am; Suven was trading 8 per cent higher at Rs 678.90, as compared to 1.2 per cent rise in the S&P BSE Sensex. The stock had hit a 52-week high of Rs 767 on January 4, 2024. The counter saw huge trading volumes on the BSE. As many as 1.26 million shares changed hands via bulk deal on the BSE at 10:25 am; the exchange data shows.

Suven is India’s leading innovator focused, integrated Pharma & Specialty Chemical Contract Development & Manufacturing Organization (CDMO) Company that has grown 16 per cent plus CAGR over last 10 years and has 40 per cent plus EBITDA margins.

Cohance is a leading CDMO and Merchant Active Pharmaceutical Ingredient (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 30 per cent plus over FY20-23 and contributes around 44 per cent to its gross profits for 9MFY24.

Advent intends to explore the merger of its portfolio company, Cohance with Suven, to build a leading end-to-end CDMO and merchant API player servicing the pharma and specialty chemical markets.

Suven in an exchange filing said the merger shall establish the company's position as a diversified CDMO and API leader in India, transcending our current revenue base. The merged entity is expected to be amongst 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.

Advent shall own ~66.7 per cent and the public shareholders will hold ~33.3 per cent of the combined entity. Cohance registered sales of Rs 892 crore and EBITDA of Rs 245 crore for 9MFY24. Sales break-up- 68 per cent API, 32 per cent innovative CDMO. The company owns 7 manufacturing facilities (4 USFDA approved). The management expects the proposed merger to be double digit accretive from the first year.