Suven to float US arm
Suven signed an agreement to buy the assets of Aceto Corporation’s Rising Pharmaceuticals and its subsidiaries
- Published 10.03.19, 1:03 AM
- Updated 10.03.19, 1:03 AM
- a min read
Suven Life Sciences, the Rs 625-crore Hyderabad-based pharmaceutical company, has said it will create a wholly owned subsidiary in the US and will invest $75 million (about Rs 525 crore) in its new business.
The board of directors, which met on Saturday, approved the creation of wholly owned subsidiary Suven Pharma Inc, a Delaware company, in the US under the contract research and manufacturing services (CRAMS) division, the company said in a regulatory filing.
Just a day before that, Suven signed an agreement to buy the assets of US-based Aceto Corporation’s Rising Pharmaceuticals and its subsidiaries.
Hyderabad-based Suven has agreed to pay gross cash proceeds of $15 million (Rs 105 crore) for the Aceto assets. It will also take on the operating liabilities and customer obligations related to the acquired business on a cash-free and debt-free basis.
Aceto, which filed for bankruptcy protection last month, said the “stalking horse” agreement that it signed with Suven is subject to a court-approved bidding process under the US Bankruptcy Code.
A stalking horse agreement refers to an initial bid for a bankrupt company’s assets and sets the lower limit in a bankruptcy auction.
Suven Life , which provides contract research and manufacturing services to global life sciences companies, said it entered into the agreement through Shore Suven Pharma Inc.
Shore Suven is a joint venture between Suven Life and US-based Shore Pharma Investments, LLC.
“This potential acquisition of Rising’s assets would transform Shore Suven Pharma into a strong US generic pharmaceutical company,” said Venkat Jasti, CEO and chairman of Suven Life.
Rising’s extensive product portfolio along with Suven’s bulk drugs and finished-dose manufacturing capabilities will help the company to better serve its US customers, he added.
In 2017-18, Suven reported a 15 per cent jump in revenues to Rs 625 crore, while the net profit surged 28 per cent to Rs 158.42 crore. Exports account for over 92 per cent of its revenues.
In the third-quarter ended December 31 last year, the company reported a 40 per cent increase in income at Rs 134.73 crore and 40.27 per cent increase in net profit at Rs 25.2 crore.
The company has three manufacturing locations at Medak, Nalgonda and Visakhapatnam. It is setting up a new unit at Pashamylaram at an investment of Rs 120 crore.