Strides, Shasun pop merger pill - Calcutta Telegraph

Mumbai, Sept: 29: Chennai-based Shasun Pharmaceuticals Ltd will be merged with generic drug maker Strides Arcolab to create a Rs 2,500-crore entity spanning across multiple segments.

The merged entity will figure among the top 15 listed Indian pharmaceutical companies in revenues and will have a presence across finished dosages, branded generics, active pharmaceutical ingredients (APIs) and contract research and manufacturing services (CRAMs).

Under the deal, the shareholders of Shasun will get five shares of Strides in exchange of 16 shares held by them. Based on the exchange ratio, Shasun shareholders will own 26 per cent of the combined entity.

After the approval of the merger, the current promoters of Shasun will be categorised as promoters of the combined entity along with the existing promoters of Strides.

The board of directors will comprise independent directors with the promoters of Strides and Shasun having the right to nominate non-independent directors in proportion to their inter-se shareholding in the combined entity. A joint press statement said the appointed date for the scheme of amalgamation is April 1, 2015.

The deal may have come as a surprise to some, but analysts said the merger was in line with the consolidation happening in the sector. In April, Sun Pharma announced that it would acquire Ranbaxy Laboratories from Daiichi Sankyo for $4 billion.

Shasun has a significant presence in APIs and contract research. It is the largest producer of ibuprofen globally.

In December last year, Torrent Pharmaceuticals had acquired the formulation business of Elder in India and Nepal for a consideration of Rs 2,000 crore. Strides, too, has been in the thick of action by acquiring a majority stake in the generic business of Bafna Pharmaceuticals in July for Rs 48 crore.

Experts said there would be more such deals in the sector as players looked at consolidating their presence in a highly competitive market having a huge potential.

Both the companies said the merger would create an entity that would have a presence in multiple segments. It will enhance the finished dosages portfolio in niche and complex domains with a pipeline of over 100 products, while there will be a combined R&D strength of over 400 personnel.

It will also lead to derisking of operations. The combined entity will have 12 manufacturing facilities, including three USFDA-approved finished dosage plants, two API units, one CRAMS facility and six units catering to the emerging markets.

“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 company with multiple growth drivers and synergies that will allow for enhanced profitability,’’Arun Kumar, founder and group CEO of Strides, said.