Suven Pharma shares off two-month high; here is how analysts view Cohance merger

Suven Pharmaceuticals merger news, Suven Pharma share price: Suven Pharmaceuticals (SUVENPHAR) shares fell on Tuesday, moving further away from a two-month high touched the previous day in an upmove following the drug maker's announcement of contract development and manufacturing organisation (CDMO) and merchant API platform provider Cohance Lifesciences with itself. The stock of Suven Pharma weakened by as much as Rs 31.3, or 4.5 per cent, to Rs 666 apiece on BSE, extending losses to a second straight day. 

At 11:25 am, Suven Pharmaceuticals shares were down 4.4 per cent for the day at Rs 666.8 apiece on the bourse.

Suven Pharmaceuticals said the merger with Cohance Lifesciences will create significant value for shareholders through best-in-class financial metrics, as it will further strengthen its industry leadership position in the CDMO industry with niche capabilities and scale benefits, provide multiple engines of growth and access to good manufacturing practice-compliant facilities, and aid synergies in terms of yields revenue and cost.

Suven said the transaction is expected to conclude over 12-15 months, subject to receipt of relevant shareholder and regulatory approvals. 

What's in it for investors?

Analysts say the merger is set to unlock value for shareholders, as envisaged by Suven. 

Suven Pharmaceuticals-Cohance merger share-swap ratio 

As part of the merger arrangement, shareholders will receive 11 Suven Pharma shares for every 295 shares held in Cohance. The stock of the new entity will also be traded on bourses BSE and NSE. 

According to Zee Business research, Suven Pharmaceuticals will have three businesses post-merger, pharma CDMO, specialty chemical CDMO and API+, which will strengthen the Hyderabad-headquartered pharma firm's position in the CDMO segment.

"Cohance Lifesciences being an integrated API and CDMO manufacturer with a strong vintage shall demonstrate strong synergies post-merger with Suven Pharma, a world-class manufacturer of pharmaceuticals and fine chemical intermediates. This merger will provide operational efficiencies, and end-to-end product development and delivery for the end-customer with strong raw material sourcing," said Manmohan Tiwana, MD and CEO, Wodehouse Capital. 

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