Posted by : Varun Doshi
On : 30 September 2014
Comments : 0
Views : 1695
Pharma companies Strides Arcolab Limited and Shasun Pharmaceuticals Limited have decided to merge, thus creating a vertically integrated company of scale.
In an all stock transaction, shareholders of Shasun Pharma would receive five shares of Strides Arcolab for every 16 shares held by them in Shasun.
In a filing with the stock exchanges, Strides Arcolab said that the board of directors of both the companies had approved a scheme of amalgamation between the two companies, creating a "vertically integrated pharma company of scale''.
The merged entity would have strong presence in "front-ended regulated markets finished dosages, emerging markets branded generics, institutional business, active pharmaceutical ingredients and contract research and manufacturing services''.
Explaining the reasons for the decision, Strides said that it "significantly enhances finished dosages portfolio in niche and complex domains'' with a pipeline of over 100 products and would hasten the product filings with its strong R&D strength of more than 400 persons.
Having a total of 12 manufacturing facilities that included 3 USFDA approved finished dosage manufacturing facilities, 2 USFDA approved API manufacturing facilities, 1 USFDA approved CRAMS facility and 6 manufacturing facilities catering to the emerging markets, the company said that the decision would help derisk the operations in a significant way. Apart from synergising operations, it would also offer economy of scale, thus cutting costs.
Arun Kumar, Founder and Group CEO of Strides, said that after the divestment of its injectables business, his company had "refocused on its oral finished formulation business''.
The merger with Shasun would create a "larger scale, fully integrated'' Indian pharma company with multiple growth drivers and synergies, paving the way for better use of infrastructure and opportunities for higher value creation for the shareholders.
Abhaya Kumar, CEO and Managing Director of Shasun, said both the companies would bring "complementary strengths and shared values of developing products and market opportunities'' across geographies.
The decision envisages amalgamation of Shasun Pharma Shasun with Strides and shareholders of Shasun will receive five shares of Strides for every 16 equity shares of Shasun held by them, leading to Shasun shareholders owning 26 per cent of the combined entity.
The present promoters of Shasun after the merger would be categorised as promoters of the combined entity along with the existing promoters of Strides.
The appointed date for the scheme of amalgamation is April 1, 2015 and is subject to all requisite approvals.
The announcement perked up the share price of Strides Arcolab which gained 8.71 per cent or Rs. 56 to move up to Rs. 698.80. But Shasun Pharma share price fell by Re 1 to Rs. 195.50 on the BSE.
Reference: Hindu Business Line