Suven Pharmaceuticals to Acquire Sapala Organics for Expansion in the CDMO Sector

On June 13, 2024, Suven Pharmaceuticals Limited announced that it had signed definitive agreements to acquire 100% of Sapala Organics Private Limited, a contract development and manufacturing organisation (CDMO) based in Hyderabad that specialises in oligo drugs and nucleic acid building blocks.

The acquisition will occur in stages, starting with an initial 67.5% purchase through a secondary transfer from current shareholders, representing 51% of the share capital on a fully diluted basis. The remaining shares will be acquired after the 2026-27 financial year, resulting in Suven owning 100% of Sapala Organics, subject to customary closing conditions.

Details Of the Acquired Entity

Sapala Organics Private Limited is a CDMO based in Hyderabad, Telangana. It specialises in oligo drugs and nucleic acid building blocks, including specialised and modified amidites, nucleosides, and drug delivery compounds such as GalNAc and Pseudodouridine. According to the latest audited financials, the company’s sales were ₹421 million for FY 2020-21, ₹1,057 million for FY 2021-22, and ₹851 million for FY 2022-23.

The entity being acquired belongs to the pharmaceutical and chemical compounds industry, specifically operating as a CDMO (Contract Development and Manufacturing Organization).

Objects And Impact Of Acquisition

Sapala Organics Private Limited is one of the few that makes Oligo building blocks and nucleic acids. This company stands out because of its exceptional knowledge of creating complex building blocks. This fits with Suven’s plan to add new and different technologies to what they already have. They also see opportunities to work better by using their good manufacturing practices and selling more things to the same customers.

Cost Of Acquisition

The acquisition involves Suven Pharmaceuticals purchasing a 67.5% equity stake (equivalent to 51% of Target’s fully diluted share capital) for approximately ₹2,295 million in cash. This amount is subject to customary adjustments for working capital and net debt.

About Suven Pharmaceuticals

Suven Pharmaceuticals, based in Hyderabad, offers services to major global pharmaceutical and fine chemical companies. The company supports the development of new chemical entities (NCEs) from process research and development to late-stage clinical trials and commercial manufacturing.

On June 14, 2024, the share price of Suven Pharmaceuticals Limited opened at ₹695.00, touching the day’s highest price of ₹705.00 as of 12:14 PM on the NSE.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.