So far, the biggest deals in the sector include Sun Pharma’s acquisition of domestic biggie Ranbaxy for $4. 1 billion, and the Piramal Healthcare sale to MNC giant Abbott for over $3. 7 billion in 2010 (see graphic) . Reacting to the news, the Suven scrip dropped 5. 2% to Rs 472 by close of Monday’s trade on the BSE.
After the acquisition, Advent intends to merge its portfolio company Cohance Lifesciences with Suven to build an end-to-end CDMO (contract development & manufacturing organisation), servicing the pharma and specialty chemical markets, a company statement said. Thepromoter Jasti family will hold only 9. 9% stake in the firm if the deal goes through. At present, the promoters Jasti Property and Equity Holdings own 60% equity stake.
The transaction is subject to regulatory approvals and Advent will launch an open offer for an additional 26% at Rs 495 per share. If the open offer is fully subscribed, Advent will have to pay another Rs 3,276 crore and the total deal size would jump to around Rs 9,589 crore.
“We are delighted to bring Advent into Suven Pharma as astrategic investor. Their experience and resources will launch the next phase of growth for Suven pharma. The proposed collaboration with Cohance is a win-win for Suven and its public shareholders. It will help us offer a broader set of services,” said Venkateswarlu Jasti, MD atSuven Pharmaceuticals.
The merger will be evaluated by the board, taking into consideration the strategic rationale and accretiveness to Suven’s public shareholders. It will also be subject to regulatory nods and other customary approvals.
Suven Pharma, which was demerged from its parent entity Suven Life Sciences in 2020, is one of the leaders in the domestic pharma CDMO space with high growth (over 20% compound annual growth rate, or CAGR, for last four years) and profitability (more than 43% margin in terms of earnings before interest, taxes, depreciation and amortisation, or ebitda).
“Our vision for Suven is to build a $1-billion global leader by executing effectively on the product pipeline, building new marquee customers, turbo-charging business development, and scaling up manufacturing and R&D,” said Pankaj Patwari, MD at Advent International.