Solara Active Pharma Shares Gain On Merger With Aurore Life Sciences
Capsules are laid out for inspection on the production line of a drug factory. (Photographer: Tomohiro Ohsumi/Bloomberg)

Solara Active Pharma Shares Gain On Merger With Aurore Life Sciences

Shares of Solara Active Pharma Sciences Ltd. gained the most in more than two months after the bulk drugmaker approved a merger of Aurore Life Sciences Pvt. with itself in an all-stock transaction.

The shareholders of Aurore will have a 27% ownership in the merged entity, Solara said in an exchange filing. After the merger, Solara will hold a 67% stake in Aurore Pharma Pvt., while promoter shareholding in Solara will rise to 55.15% from 42.57%. Aurore Group consists of Aurore Life Sciences and its ownership in Aurore Pharma.

The move, the filing said, aims to create the nation’s second-largest pure-play active pharmaceutical ingredient/contract research and manufacturing company.

Solara’s board also approved the merger of Empyrean Lifesciences Pvt. and Hydra Active Pharma Sciences Pvt. with itself.

“The combination creates a pure play API company of scale with 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,” the filing said.

The merger, according to Solara, is EPS accretive and is in line with its strategy of accelerating growth through inorganic actions.

Here’s how the four companies involved in the transaction are related:

  • Karuna Business Solutions LLP is a common promoter in Solara and Hydra Pharma, holding 7.83% and 27.75% stake, respectively.

  • Hydra Pharma holds 61.65% stake in Aurore Life Sciences.

  • Empyrean is a wholly-owned subsidiary of Aurore Life Sciences.

Solara also said the merger will lead to significant synergistic opportunities in operations and cost savings through economies of scale. “The combination will provide a compelling value proposition for both our generic APIs and CRAMS (Contract Research And Manufacturing Services) customers,” Managing Director and Chief Executive Officer Bharath Sesha was quoted as saying in the filing.

Deal For Shareholders:

  • Shareholders of Aurore will get 1,298 shares of Solara for every 10,000 shares held.

  • Shareholders of Hydra will get 884 shares of Solara for every 10,000 held.

  • Since the entire shareholding of Empyrean will now be held by Solara, there will be no shares issued to their shareholders.

Shares of Solara gained as much as 9.1% — the most in a single day since Jan. 29. The stock is up for the fourth straight session and is also trading at its highest in two months. That compares with the 2.3% drop in the Nifty 50 as of 11 a.m. on Monday. All the four analysts tracking the company recommend a ‘buy’, according to Bloomberg data. The average of the 12-month consensus price target implies an upside of 31.3%.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.