Cohance, Suven merger get approval from NSE and BSE

Suven Pharmaceuticals recently received approval from the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE) for the proposed merger with Cohance Lifesciences. A joint application by Suven and Cohanc has been filed before NCLT. Expected timelines for the completion of the merger process as indicated prior: 12-15 months.

The newly formed company will operate three main verticals: Pharma CDMO, Agrochemicals CDMO, and API manufacturing. The combined entity will emerge as an integrated CDMO player with development and manufacturing capabilities.

The management expects growth in revenue and EBITDA for the full year of FY25, with growth accelerating in FY26. At a combined platform level, the company aims to double the business over the next five years and add further growth traction from M&A opportunities over a similar time frame.

Cohance is a CDMO and Merchant API platform in select low-mid volume molecules and unique capabilities in the form of its antibody-drug conjugates (ADC) platform. The CDMO segment has grown at a healthy CAGR of 30 per cent + over FY20-23 and contributes ~42 per cent to its Gross Profits for FY24.

The merged platform has 37 per cent + EBITDA margins, 30 per cent + RoCE, and sturdy cash flow generation. Potential to drive ~10 per cent of incremental EBITDA from various revenue and cost synergy initiatives, over the next 2-4 years.      

Leading PE equity player Advent currently owns a 50.1  per cent stake in Suven Pharma and 100 per cent in Cohance. Following the proposed merger, Advent will own 66.7  per cent of the equity in the combined entity.