Advent announces merger of Cohance with Suven

Private equity major, Advent in December 2022 had taken a majority control in Suven Pharmaceuticals (SP).

At that time, Advent had disclosed in the filings that it intends to explore the merger of it’s umbrella CDMO entity, Cohance Lifesciences into SP and hence create an integrated, larger and listed franchise with the associated benefits.

Now, a little more than a year later, Suven is going ahead with the merger of Cohance with itself.

As per SP’s press release –

“Cohance is a leading CDMO and Merchant API platorm with global leadership in select low-mid volume molecules as well as unique capabilies in the form of its antibody drug conjugates (ADC) platform. Their CDMO segment has grown at healthy CAGR of 30%+ over FY20-23 and contributes ~44% to its Gross Profits for 9mFY24.”

  • Shareholders of Cohance will be issued shares of SP in the ratio of 295:11 i.e., 11 shares of SP for every 295 shares of Cohance
  • Post merger, Advent shall own ~66.7% of the combined entity and balance by others
    • Currently Advent has a controlling stake of 50.10% in SP, 9.90% is with the erstwhile promoters, 26% by institutions and balance by public.
  • Merged entity will comprise three distinct business units – Pharma CDMO, Spec Chem CDMO, and API+ (inclusive of formulations)
  • Merger is expected to result in 2x Scale for SP and Double-Digit EPS Accretion in the first year itself.

The announced merger definitely seems super accretive to SP. How much of this actually plays out, remains to be seen.

For now, I will simply consider this to be a consolidation exercise by Advent with a larger stake in a publicly listed entity.

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