Cohance Lifesciences (COHANCE) M&A Announcement summary

Deal rationale and strategic fit

• Acquisition of a controlling stake in Sapala Organics aligns with the strategy to invest in high-growth, niche technologies like oligonucleotides and ADCs, enhancing the integrated CDMO platform in India and positioning Suven as a deep-domain integrated player.

• Sapala brings unique expertise in oligonucleotide drugs, nucleic acid building blocks, and has a strong Japan presence, complementing Suven's growth strategy.

• The deal targets the high-growth oligo building blocks market, expected to grow at 18–20% CAGR, with a $750M addressable market.

• Sapala’s robust innovator customer base across the US, EU, and Japan enhances global reach and strengthens relationships with innovative pharma and biotech customers.

• The deal leverages Sapala’s R&D depth and Suven’s customer access and manufacturing capabilities for meaningful synergies.

Financial terms and conditions

• Initial consideration of INR 2,295 million for a 51% stake, subject to net cash and working capital adjustments, with full acquisition targeted within three years.

• Full acquisition (100%) valued at a 13-15x EBITDA multiple, with the remaining stake to be acquired over three years.

• Sapala reported FY24 revenues over INR 670 million and adjusted EBITDA margins above 45%, with revenue CAGR of 18% over the last three years.

• Transaction expected to be financed through internal accruals and cash reserves.

• Expected to be EPS accretive from the first year of acquisition.

Synergies and expected cost savings

• Combining Sapala’s specialized R&D and Suven’s manufacturing and customer network is expected to drive platform-wide synergies and enable deeper customer engagement.

• Immediate onboarding of Suven’s existing customers to Sapala’s offerings and cross-selling opportunities are key growth drivers.

• Cost optimization through material sourcing and adoption of best practices across the platform.

• Sapala promoter to act as strategic advisor for Suven's business initiatives in Japan.

• Leveraging long-standing relationships with innovative companies to accelerate client acquisition and molecule progress.