As per the regulatory filing, the merger is EPS accretive to Solara and will enhance other important financial ratios for Solara. The merger is in line with Solara’s strategy of accelerating growth via appropriate inorganic actions. The combined entity will have the scale of market presence and product portfolio combined with robust manufacturing and R&D infrastructure to grow into a leading global pure-play API and CRAMS company.
Notably, the combination creates a pure-play API company of scale with a strong presence in Regulated Markets, Emerging Markets, a broad product portfolio, robust operations infrastructure, excellent R&D capabilities and clear synergies to further accelerate growth for the combined entity.
Bharath Sesha, the MD & CEO of Solara said, "The two entities complement each other on product portfolio, geographical presence and customers while amplifying the strengths on world-class quality systems, strong R&D capabilities and robust manufacturing infrastructure."
Sesha added, "The combination will provide a compelling value proposition for both our generic API s and CRAMS customers and exciting opportunities for the talented teams to grow with the company. I am excited to leverage the entrepreneurial growth mindset that Raj and his team bring to further add to the significant strengths that Solara has. I welcome the entire Aurore team and look forward to working together to create a customer-focused organization with passionate and engaged employees."
Merger Scheme details:
1. Shareholders of Aurore Life Sciences Private Limited and Hydra Active Pharma Sciences Private Limited shall be issued 1,32,94,800 equity shares of Solara Active Pharma Sciences Limited. According to this, the shareholders of the Transferor Companies would have a 27% stake in Solara Active Pharma Sciences Limited.
2. With this merger, Aurore Life Science Private Limited, Empyrean Lifesciences Private Limited and Hydra Active Pharma Sciences Private Limited shall be merged into Solara Active Pharma Sciences Limited and post-merger, Solara will hold a 67% stake in Aurore Pharmaceuticals Private Limited.
3. Post-Merger, Promoter group holding shall be 55.15% and public holding shall be 44.85%
4. The Appointed Date for the merger would be 1st April 2021 and the merger process is expected to be completed in Q4 FY 2021-22.
5. The merger is subject to certain conditions including approvals from stock exchanges, SEBI, shareholders, creditors, jurisdictional National Company Law Tribunal and other applicable statutory authorities.
Rajender Rao Juvvadi, the MD of Aurore said, "The merged entity provides a platform to combine the advantages of scale with a lean and cost-efficient unique product development ability. Aurore’s R&D ability and speed of validations, filings and continuing product portfolio creation would enable the merged entity to substantially scale up and underpin its pure-play presence. The merger will enhance customer confidence in the ability of the combined entity to deliver the product range under the backing of quality infrastructure and enable a broader global customer footprint. The combined impact on the aggregation of strengths would significantly enhance shareholder value."
Strategic Rationale of the Merger:
- The combination significantly enhances the product portfolio of the combined entity
- The addition of 2 sites (one of them USFDA approved) will enable the creation of additional sourcing locations for key products for our customers, further underlining the reliability of supply
- The merged entity will leverage the strong R&D investments bringing more products to market with improved time to market
- The merger will add scale and capabilities to the existing CRAMS business of Solara and will aid in accelerated growth of this business
- The merger will lead to significant synergistic opportunities in operations and cost savings through economies of scale
- The merger creates a leading pure-play API player with a global market presence, diverse product portfolio and strong customer relationships
At around 1.29 pm, Solara was trading at Rs1472.40 per piece up by Rs101.55 or 7.41% on Sensex.