Strides Arcolab to merge Shasun with itself in all-stock deal

In another major deal in the Indian pharmaceutical sector, Bangalore-headquartered Strides Arcolab is merging with itself the Chennai-based Shasun Pharmaceuticals in an all-stock deal.

The merger will create an entity valued at Rs.2,500 crore, according to Strides officials. As per the deal structure, Shasun shareholders will get five shares of Strides for every 16 held in Shasun, according to both the companies.

Based on the exchange ratio, Shasun shareholders will own 26 per cent of the combined entity, the statement said. Additionally, the current promoters of Shasun, post the approval of this merger, will become promoters of the combined entity.

Strides stock went up 8.71 per cent on the BSE and closed at Rs.698.80 but Shasun shares fell by a rupee to close at Rs.195.5.

In a prepared statement, Strides Founder and Group CEO Arun Kumar said: “Today’s proposed combination with Shasun accelerates our strategy and growth prospects by creating a larger scale, integrated 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 shareholder group.”

In February 2013, Strides sold its injectable drugs business to US firm Mylan Inc for $1.6 billion.

Shasun, which has a market value of $193.5 million, makes drug ingredients and finished medicines, besides providing contract research and manufacturing services. It supplies to North America, Europe, Asia and Latin America.

The deal comes five months after Sun Pharmaceuticals acquired Ranbaxy Laboratories for $4 billion, signalling the ambitions of Indian pharma companies which are struggling to achieve scale.

The Strides-Shasun entity will have a strong presence in the finished dosages segment in regulated markets, branded generics in emerging markets, institutional business, active pharmaceutical ingredients and contract research and manufacturing services, according to company officials.

Strides said this merger 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 presence. At present, the company has around 400 employees in its R&D division.

With this development, Strides is looking grow aggressively. In July, Strides Arcolab acquired a majority stake in the Indian branded generics business of Bafna Pharmaceuticals for ₹48.1 crore, thereby giving its India business an impetus. Business Line