Suven Pharma falls as Advent targets 76% stake in it after open offer

Advent International will first acquire 50.1 percent stake in the company for Rs 6311 crore, at Rs 495 per share. Then it will launch an open offer for another 26 percent equity

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Shares of Suven Pharma opened higher on December 26 but soon erased gains after private equity firm Advent International confirmed that it will acquire a “significant” stake in the company.

At 1:45 pm, the stock was quoting at Rs 486 on the NSE, lower by 2 percent. It opened at Rs 515 apiece, 3.8 percent higher than Friday’s close of Rs 496.05. Trading volumes at 20 lakh shares were higher than 20-day average volume of 3.35 lakh shares.

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As per the exchange filing, Advent International will first acquire 50.1 percent stake in the company for Rs 6311 crore, at Rs 495 per share. Then it will launch an open offer for another 26 percent equity at acquisition value of Rs 3276 crore.

Advent International will hold 76.10 percent of the voting share capital after the open offer, while stake held by promoter group Jasti Property and Equity Holdings will come down to 9.9 percent from 60 percent.

“The primary reason behind this deal is that we were unable to bring in a succession plan in place. We are excited to have Advent as a strategic investor. The deal will be EPS accretive,” Venkat Jasti, CEO of Suven Pharma, told CNBC-TV18.

Suven Pharma, which was demerged from its parent entity, Suven Life Sciences in 2020, has gained over 238 percent since its listing. The company is a leader in the Indian pharma CDMO (Contract Development and Manufacturing Organization) space.

Advent International, too, has its own brand identity by the name Cohance Lifesciences for its CDMO and API platform. With Suven Pharma’s acquisition, it might be eyeing to merge the two entities.

“The potential combination of Suven and Cohance has the ability to become a powerhouse operating across the pharmaceutical value chain. The combined entity will have three massive growth vectors across pharma CDMO, speciality chemicals and merchant API, each of which have strong macro tailwinds. There are strong front-end and operational synergies between the two businesses which will be leveraged” Pankaj Patwari, Managing Director at Advent International, said.