Strides Arcolab, a Rs. 1,250 crore pharma major from Bengaluru, has decided to amalgamate Shasun Pharmaceuticals, a Rs. 1,150 crore pharma entity from Chennai, in an all-stock transaction after certain approvals. The combination will create a vertically integrated pharma company of scale with strong presence in front-ended regulated markets, finished dosages, emerging markets branded generics, institutional business, APIs and contract research and manufacturing services. The appointed date for the scheme of amalgamation is fixed at April 1, 2015 and the transaction is expected to close by June 2015.
Shashun shareholders will get 5 equity shares of Strides for every 16 equity shares held. Combined entity will able to generate revenue of over Rs. 2,500 crore. After the new of amalgamation Shasun share declined by Rs. 3.80 to Rs. 192.70 and Stride share improved sharply by over 8.7 per cent to Rs. 699 on BSE.
Based on the exchange ratio, Shasun shareholders will own 26 per cent of the combined entity. The current promoters of Shasun will, post the approval of the merger, be categorized as promoters of the combined entity, along with the existing promoters of Strides.
The combination will significantly enhance finished dosages portfolio in niche and complex domains with a pipeline of over 100 products and accelerates product filings with combined R&D strength of over 400 personnel. Combined entity will have 12 manufacturing facilities including three US FDA approved finished dosage manufacturing facilities, two US FDA approved API manufacturing facilities, one US FDA approved CRAMS facility and six manufacturing facilities catering to the emerging markets.
Arun Kumar, founder and Group CEO of Strides, said, “Since the divestment of our injectables business, which resulted in significant value creation for our shareholders, Strides has refocused on its oral finished formulation business. Today's proposed combination with Shasun accelerates our strategy and growth prospects by creating a larger scale, fully integrated, leading Indian pharma company with multiple growth drivers and synergies that will allow for enhanced profitability and more efficient use of our combined infrastructure and enhanced value creation opportunities for the combined shareholders group. I am excited to work more closely with the Shasun promoters and leadership in jointly building the combined entity to become one of the leading global players.”
Abhaya Kumar, CEO and managing director of Shasun said, “We are very excited about combining with Strides, which has a tremendous track record of crating shareholder value. Strides and Shasun bring complementary strengths and shared values of developing products and market opportunities across geographies and the combination accelerates both scale and scope. We are confident that the vertically integrated new combination will deliver further additional value in the near term for all stakeholders above and beyond the strong gains we have achieved to date on our own.