Advent International, a global private equity firm, Thursday announced the plan to merge two of its pharmaceutical portfolio companies, Cohance Lifesciences Ltd and Suven Pharmaceuticals Ltd, with an aim of creating a diversified contract development and manufacturing organization (CDMO) and active pharmaceutical ingredient (API) leader in India.
Under the proposed scheme, 11 shares of Suven will be issued for every 295 shares of Cohance. Advent entities shall own around 66.7% of the merged entity, and the public shareholders will hold the rest.
The transaction is expected to be completed over the next 12-15 months, pending shareholder and regulatory approvals.
Shares of Suven jumped over 10% to Rs 694.95 rupees on Friday following the announcement on the merger.
Cohance Lifesciences operates in nearly 60 countries, with a diverse portfolio of over 80 molecules and seven manufacturing facilities. It has demonstrated strong growth, with its CDMO segment growing annually at over 30% compounded between FY20 and FY23. Suven Pharmaceuticals has achieved over 16% CAGR over the last decade,
The merged entity will operate with three distinct business units – pharma CDMO, speciality chemical CDMO, and API+ (inclusive of formulations), boasting an expanded capacity of approximately 2,650 kL.
The combined platform has EBITDA (earnings before interest, taxes, depreciation, and amortization) margins of around 35% and more than 30% return on capital employed (RoCE).
“The combination helps us drive multiple synergies both on the revenue and cost front,” said V Prasada Raju, managing director of Suven Pharmaceuticals. The deal is expected to facilitate cross-selling opportunities, leveraging each company's capabilities to reach new customers.
Advent's acquisition of a 50.1% stake in Suven in September marked the initial step, with plans to explore the merger of Cohance Lifesciences.
Previously, Advent has combined its three entities namely RA Chem Pharma, ZCL Chemicals, and Avra Laboratories into Cohance Lifesciences.
Citigroup Global Markets India Pvt Ltd and Kotak Investment Banking were financial advisors for the proposed merger.
Advent International has been actively investing in India since 2007, and its notable healthcare investments include CARE Hospitals and Bharat Serums and Vaccines. Globally, Advent has an extensive portfolio, having invested over $78 billion in 420 private equity investments across 42 countries, with $91 billion in assets under management (AUM).