Suven, Cohance announce merger

Suven Pharmaceuticals and Cohance Lifesciences announced a proposed scheme of amalgamation for the merger of Cohance with Suven. The merged entity is expected to be a leading integrated CDMO players in India with an expanded capacity to ~2,650 kL and a broadened customer base.

Cohance is a CDMO and merchant API platform with strong capabilities in select low-mid volume molecules and its antibody drug conjugates (ADC) platform. Reportedly, their CDMO segment has grown at healthy CAGR of 30 per cent + over FY20-23 and contributes ~44 per cent to its Gross Profits for 9m FY24.

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. The merged platform to comprise three distinct business units – Pharma CDMO, Spec Chem CDMO, and API+ (inclusive of formulations)

Suven informed that the merger also expands the scope of product offering to existing customers through access to multiple GMP facilities (US FDA audited). On the costs side, the benefits include sourcing materials through common vendors, cost optimisation across the platform, potentially lower investments in G&A and sharing of best practices across the platform.

The company also informed that the merged platform has best-in-class financial metrics: mid-30s EBITDA margins, 30 per cent + RoCE, sturdy cash flow generation over FY20-23.

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 per cent and the public shareholders will hold ~33.3 per cent of the combined entity (pre- ESOP dilution).

The overall transaction is expected to conclude over next 12-15 months subject to receipt of all relevant shareholder and regulatory approvals.