SeQuent Scientific jumps 18% after announcing merger with Viyash Life

The company said the proposed merger is expected to be Ebitda margin accretive and deleverage SeQuent's balance sheet.fle

Shares of SeQuent Scientific soared 18 per cent on the BSE on Friday’s intra-day trade to hit a three-year high of Rs 224.80, amid heavy volumes.

The stock of the pharmaceutical company extended its rally after it announced a strategic merger of Viyash Life Sciences (Viyash) and its subsidiaries, with its subsidiary to create a global animal health leader with end-to-end integrated capabilities.

The proposed merger is expected to be earnings before interest, tax, depreciation and amortisation (Ebitda) margin accretive and de-leverage SeQuent’s balance sheet.

In one week, the stock of the pharma firm has zoomed 30 per cent, as compared to the 1.1 per cent gain in the BSE Sensex. At 12:13 pm, SeQuent was trading 14 per cent higher at Rs 216.40, compared to the 0.06 per cent decline in the benchmark index.

A combined 41.44 million equity shares, representing 16.6 per cent of the total equity of the company, had changed hands on the NSE and BSE so far. The stock is trading at its highest level since October 2021.

 

Viyash Lifesciences deal

On Thursday, September 26, SeQuent’s board approved a composite scheme of amalgamation for the merger of Viyash and its group companies, along with Sequent Research, its wholly owned subsidiary, with itself.

Each shareholder of Viyash will receive 56 equity shares of SeQuent for every 100 equity shares of Viyash they hold, and every warrant holder of Viyash will receive 56 warrants of SeQuent for every 100 warrants of Viyash they hold, SeQuent said in its exchange filing.

SeQuent is a leading animal health pharmaceuticals company with a global footprint, and presence in formulations and active pharmaceutical ingredients (API) segments across multiple markets and customers.

Viyash Life Sciences is an integrated end-to-end pharmaceutical company with a presence across niche formulations, APIs and advanced intermediates.

 

Outlook for SeQuent

The amalgamation proposed would combine the inherent capabilities of Viyash and SeQuent to create a platform with leadership in animal pharmaceuticals, end-to-end integrated capabilities across the larger global pharmaceuticals market, with a strong operations and R&D backbone.

The combined entity can leverage each other’s global marquee customer base with an opportunity to participate in the larger global pharmaceuticals market.

For instance, it can leverage Viyash’s strong product development, R&D, regulatory, and manufacturing capabilities to accelerate new product development and new product launches and take a wider basket of products and services to their customers, the company said.

The combined entity will have a more robust financial profile, as reflected in its margin profile and balance sheet. Further, the entity will have a 5x higher R&D talent pool and 9x more US FDA approved manufacturing facilities, which will form a strong operating backbone to better serve its customer base, it added.

Moreover, the company's recently launched products in the companion animal segment have garnered positive feedback from customers worldwide, showing promise for contributing positively in the coming years, it said in its FY24 annual report.

SeQuent's seven manufacturing facilities, located in India, Spain, Brazil and Turkey, have obtained approvals from leading global regulatory bodies such as US FDA, EUGMP, WHO, and TGA, among others.