Suven Pharma to buy 67.5 percent stake in Sapala Organics for Rs 229.5 crore

Published On 2024-06-15 09:26 GMT | Update On 2024-06-15 09:26 GMT

Mumbai: Suven Pharmaceuticals has announced that the Company will acquire 67.5 per cent stake in Sapala Organics Private Limited for Rs 229.5 crore.

The Company has entered into a definitive agreement for a strategic controlling investment in Sapala Organics, subject to regulatory approvals and conditions, it stated in a release.

Suven to acquire 67.5% equity stake (i.e., 51% of the share capital of the Target on a fully diluted basis) for a consideration of Rs 2,295 mn subject to customary Working Capital and net debt adjustments, the Company stated in a BSE filing.

Suven to acquire a controlling stake initially whereas the existing shareholders of Sapala will continue to hold a significant minority stake for the next few years. Dr Reddy will continue to run the business as the CEO and also be associated with the Suven+Chance platform as a strategic advisor for the Japan market. Overall, 100% acquisition is expected to be in the range of 13-15x EBITDA multiple and is linked to the next three years’ financial performance.

"The company expects to complete the acquisition of 67.5% equity stake (i.e., 51% of the share capital of the Target on a fully diluted basis) during 2nd quarter of FY24- 25, subject to the completion of customary closing conditions. The company expects to complete the acquisition of remaining equity stake after FY2026-27, subject to the completion of customary closing conditions," Suven added.

On the acquisition, Mr Annaswamy Vaidheesh, Executive Chairman, Suven said “We are delighted to partner with Sapala and believe it is a strong strategic fit. We see massive potential given it’s a niche technology in the rapidly growing space. Nucleic acid-based therapy targets diseases at a genetic level and has the potential to help patients immensely and cure previously incurable conditions. With this acquisition, we now have multiple differentiated technology platforms such as ADCs and Oligos amongst others. We will continue to invest both organically and inorganically to further build on these.”

Dr V Prasada Raju, Managing Director, Suven added “Sapala has built unique capabilities in the complex Oligo building blocks segment. The space is poised to grow multi-fold with many of our own customers looking to expand in this space. We are convinced that combining Sapala’s R&D depth, team’s 30+ years of experience and Dr Reddy’s Japan experience with our customer access & manufacturing capabilities will help drive significant synergies across the entire platform.”

Dr P Yella Reddy, founder of Sapala said “We have built Sapala as a unique CDMO player in the oligonucleotides value chain, largely thanks to the highly capable team that I have had the privilege of leading. Sapala has earned the trust of its customers over the last two decades by consistently taking up challenging projects, developing and scaling up highly complex technologies. A strategic partner like Suven, with its wider reach and resources will help to take Sapala to the next level while providing significant growth and development opportunities for Sapala's employees as well. We at Sapala are excited with the possibilities that this partnership brings. I also look forward to working with the larger team at Suven for their Japan market initiatives and hope to contribute to the platform’s success in that market.”

The transaction will be subject to customary closing conditions. Steadmount Capital Advisors and Banyan Advisory acted as advisors to Sapala.

Sapala is a Hyderabad based CDMO focused on Oligo drugs and nucleic acid building blocks including specialized/modified Amidites & Nucleosides, drug delivery compounds (including GalNAc), Pseudouridine, amongst others. Oligo & nucleic acid building blocks market is a ~$750M market and is expected to grow at a robust ~20% CAGR.

Sapala has experience in a comprehensive range of specialized building blocks. Sapala was founded by Dr P Yella Reddy who has extensive experience in nucleic acid chemistry and formerly worked as Director (R&D) with Aisin Cosmos R&D Co. Ltd (Toyota Group) in Japan & India for 20+ years. Sapala had a revenue of over INR 670mn and adjusted EBITDA margins of 45%+ for FY24.

Read also: USFDA completes inspections at Suven Pharma facilities with no form 483

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Ruchika Sharma

Ruchika Sharma joined Medical Dialogue as an Desk Editor for the Business Section in 2019. She covers all the updates in the Pharmaceutical field, Policy, Insurance, Business Healthcare, Medical News, Health News, Pharma News, Healthcare and Investment. She has completed her B.Com from Delhi University and then pursued postgraduation in M.Com. She can be contacted at editorial@medicaldialogues.in Contact no. 011-43720751

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Suven Pharma to buy 67.5 percent stake in Sapala Organics for Rs 229.5 crore

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