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Business News/ Companies / Advent merges Cohance and Suven

Advent merges Cohance and Suven

The merged entity will have three distinct business units – Pharma CDMO, Spec Chem CDMO, and API+, inclusive of formulations

In Calendar Year (CY) 23, the M&A deals totalled 793, a drop of 10% compared to CY22Premium
In Calendar Year (CY) 23, the M&A deals totalled 793, a drop of 10% compared to CY22

Mumbai: Global private equity firm Advent International has merged two of its pharmaceutical portfolio firms, Cohance Lifesciences Ltd. and Suven Pharmaceuticals Ltd, according to a joint announcement. The merged entity will have three distinct business units – Pharma CDMO, Spec Chem CDMO, and API+ (inclusive of formulations), the release said.

For every 11 shares of Suven, 295 shares of Cohance will be allotted, as per the terms of the merger.

“The new shares of Suven so issued will be traded on the NSE and BSE. Advent entities shall own around 66.7% stake and the public shareholders will hold around 33% stake in the merged entity. This ratio is pre-ESOP dilution," the firms clarified in the release.

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

The merger further strengthens Suven’s position with niche capabilities and scale benefits, the joint release said.

“The merger shall establish Suven’s position as a diversified CDMO and API leader in India, transcending our current revenue base. The merged entity is expected to be amongst the leading integrated CDMO players in India. With an expanded capacity to ~2,650 kL and a significantly broadened customer base, scale and synergy benefits are substantial," the statement said. 

CDMO is short for contract development and manufacturing organization, and API stands for active pharmaceutical ingredient.

Cohance is a leading CDMO and merchant API platform having developed low-mid volume molecules as well as capabilities in the form of its antibody drug conjugates (ADC) platform. Cohance’s CDMO segment has grown annually at more than 30% on a compounded basis between FY20 and FY23, and contributes around 44% of its gross profits for nine months upto December 2023.

“Our integrated CDMO model enables comprehensive molecule development and life cycle management for both pharmaceutical and specialty chemical partners," the statement said, adding: “Cohance’s addition, particularly its fast-growing ADC platform, reinforces our position as a leading CDMO platform."

According to the company, the anticipated synergy benefits from the merger is substantial. “On the revenue front, the limited customer overlap will help with cross-selling opportunities, leveraging Cohance's capabilities to reach Suven customers and vice versa, e.g. leverage ADC platform and lifecycle management of key molecules for Suven customers," the statement said.

“This is a transformative step in Suven’s journey of growth and building a respected integrated CDMO player. We are extremely excited about the benefits of combined scale, capabilities, complementary customer base and best practices that will further help enhance our leadership position in India and globally," said Annaswamy Vaidheesh, executive chairman, Suven.

The merged platform is expected to have earnings before interest, tax, depreciation and amortisation or Ebitda margins of around 35%, more than 30% RoCE and sturdy cash flow generation over FY20-23.

“The combination helps us drive multiple synergies both on revenue and cost front," said Dr V Prasada Raju, Managing Director, Suven.

In September last year, Advent picked up 50.1% stake in Suven at 495 per share. It also made an open offer to the other shareholders of the company to acquire remaining 26% stake. Prior to that, Advent combined its three entities namely RA Chem Pharma, ZCL Chemicals, and Avra Laboratories into Cohance Lifesciences.

“This merger represents our continued commitment to build a leading CDMO player in India, driven by innovation, growth, and value creation. Drawing inspiration from global peers with similar end-to-end capabilities, we are confident in our ability to scale globally," said Shweta Jalan, Board Member, Suven and managing partner and head of Advent International in India.

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Sneha Shah
Sneha writes on new economy businesses, private and public marker funding and deals. She writes about startups and the new economy, specifically PE/VC and investment banking.
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Published: 29 Feb 2024, 11:20 PM IST
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