Sequent Scientific and Viyash Life Sciences have announced a merger that will result in the two companies forming a combination that will create a platform with leadership in animal pharmaceuticals, end-to-end integrated capabilities across the larger global pharmaceutical market with a strong operating and research and development backbone, according to a stock exchange filing.
ET had first reported that Sequent Scientific and Viyash Life Sciences were in talks for a Rs. 7000-8000 crore merger in its online edition on Thursday afternoon.
“Board of directors of the company…have approved a composite scheme of amalgamation for the merger of Viyash Life Sciences Private Limited and its group companies and Sequent Research Limited, a wholly owned subsidiary of the Company with the Company, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013”, Sequent Scientific said in the stock exchange disclosure.
Sequent Scientific is listed and Viyash Life Sciences isn’t. In financial year 2023-24, the former had operating profits of around Rs. 100 crore whereas the latter had operating profits of around Rs. 150 crore.
Carlyle is a major shareholder of both companies.
“We are thrilled to announce a transformative step in our journey towards creating a unique, differentiated global leader in Animal health with integrated capabilities”, said Sequent’s chief executive officer, Rajaram Narayanan.
Narayanan said the merger would help build Sequent’s research and development capabilities.
“We believe that in order to continue to deliver differentiated value to our customers in times to come, it is imperative to scale up our product development and R&D capabilities to capture the market opportunity we are seeing and to build on our leadership in the Animal health market”.
Viyash’s founder Haribabu Bodepudi who was formerly the chief operating officer of global drug major Mylan (now known as Viatris) hailed the combination.
“This merger brings together two complementary businesses that share a commitment to innovation, operational excellence, and delivering world-class solutions for our customers”, said Haribabu Bodepudi, who currently officiates as Viyash’s chief executive officer.
According to the disclosure, each shareholder of Viyash Life Sciences will receive 56 equity shares of Sequent Scientific for every 100 equity shares of Viyash held by them.
This will result in the capital base of Sequent Scientific expanding from the present 24,94,80,995 shares to 42,89,38,532 shares. The promoter and promoter group’s shareholding will be around 62.4% in the combined entity.
At Thursday’s closing price the value of the combined entity with the expansion in its capital base will be around Rs. 8192 crore.
The two entities propose to leverage each others global marquee customer base and technical skills, they said. The merger is expected to expand their marketing presence across geographies, facilitate backward integration and create procurement synergies.
Viyash is already a qualified supplier for intermediates to Sequent for one of the largest active pharmaceutical ingredients (API) that Sequent manufactures for the US market, as per the disclosure.
The combined entities will have 16 manufacturing plants out of which 10 are US Food and Drug Administration approved plants.
JM Financial and Ernst & Young acted as financial advisors to Sequent Scientific and Viyash Life Sciences respectively on the merger. Law firm AZB and Partners advised Sequent Scientific and Trilegal advised Viyash Life Sciences. KPMG and PwC were independent valuers and ICICI Securities provided a fairness opinion on the swap ratio recommended by the valuers, as per the stock exchange notification.
