Suven Pharmaceuticals promoter Jasti family is selling a 50.1 per cent stake in the company for Rs 6,313.08 crore to global private equity investor Advent International, according to regulatory filings.
Subsequently, the PE major through its manager Kotak Mahindra Capital Company Ltd has announced an open offer to acquire 26 per cent more in the listed contract development and manufacturing organisation from public shareholders, entailing a total outgo of Rs 3,276.25 crore if fully subscribed.
As per the open offer document shared on BSE by Suven Pharmaceuticals, the offer has been triggered by the share purchase agreement that Advent has entered into a pact with the promoters to acquire over 12.75 crore shares, representing a 50.1 per cent stake in Suven Pharmaceuticals for Rs 495 per equity share.
Through the open offer, Advent proposed to acquire up to 6,61,86,889 equity shares constituting 26 per cent of the voting share capital for Rs 495 per share.
In a statement, Advent said it has entered into a definitive agreement to acquire a significant stake in Suven Pharmaceuticals, subject to regulatory approvals and conditions.
Advent further said it intends to explore the merger of portfolio company Cohance with Suven to build a leading end-to-end Contract Development and Manufacturing Organisation (CDMO) and merchant Active Pharmaceutical Ingredient (API) player, servicing the pharma and speciality chemical markets.
The merger will be evaluated by the board taking into consideration the strategic rationale and accretiveness to Suven's public shareholders.
In a conference call, Suven Pharmaceuticals Ltd Managing Director Venkateswarlu Jasti said the deal is expected to be closed in five to six months and the details of the proposed merger with Cohance were still being worked out, including what could be the share swap ratio.
Analysts, however, raised concerns over the lack of clarity about the proposed merger with Cohance during the conference call.
Jasti assured that a call, which would also include representatives from Advent, would be arranged at the earliest possible with the investors.
He said there is an 18-month lock-in period for the promoters to hold the residual stake of 9.1 per cent stake in Suven Pharmaceuticals, although they have no plans to sell the residual stake as long as it creates value not just for the shareholders but for themselves.
Jasti will cease to be the Managing Director of the company and will provide consultancy services as the Chief Advisor after the deal is completed.
On the transaction, he said, "Advent is the ideal partner for us, with deep expertise in healthcare, and a global network of professionals and experts. Their experience and resources will launch the next phase of growth for Suven pharma."
The merger with Cohance is also a win-win and will help the company offer a broader set of services and multi-sites to its customers, he added.
Advent's managing director Pankaj Patwari said the PE fund wishes to build a USD 1 billion global leader through the acquisition by executing effectively on the product pipeline, building new marquee customers, turbo-charging business development, and scaling up manufacturing and R&D.
"We plan to build on Suven's capabilities and make it one of the global leaders in the CDMO space. We intend to explore a merger of Cohance with Suven in a manner which is synergistic and accretive for Suven's shareholders," Shweta Jalan, Managing Partner and Head of Advent International in India, said.
Suven was demerged from its parent entity Suven Life Sciences in 2020, and has been growing revenues at over 20 per cent over the last 4 years, and expanded its operating profit margins by over 43 per cent.
It does 90 per cent of its business with innovators and follows the customer from Phase 1 to commercialisation, the statement said, adding that Cohance is fully owned by Advent and had a revenue of Rs 1,280 crore in FY22.
Advent has been investing in India since 2007 and founded its Mumbai office in 2009. Currently, it has invested/committed over USD 3.2 billion across 14 companies with headquarters or operations in India in sectors, such as business and financial services, retail, consumer and leisure, healthcare, industrial and technology.
