According to a stock exchange filing, Sequent Scientific and Viyash Life Sciences to merge to form a platform with leadership in animal pharmaceuticals, end-to-end integrated capabilities across the larger global pharmaceutical market, and a strong operating and research and development backbone.

On Thursday afternoon, the web edition indicated that Sequent Scientific and Viyash Life Sciences were in discussions for a Rs. 7000-8000 crore merger.

"Board of directors of the company…have approved a composite scheme of amalgamation for the merger of Viyash Life Sciences Private Limited and its group companies and Sequent Research Limited, a wholly-owned subsidiary of the Company with the Company, under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013" , Sequent Scientific reported in its stock exchange filing.

Sequent Scientific is included, but Viyash Life Sciences isn't. In the fiscal year 2023-24, the former had operational earnings of roughly Rs. 100 crore, while the latter had operating profits of around Rs. 150 crore.

Carlyle is a big stakeholder in both firms

"We are thrilled to announce a transformative step in our journey to create a unique, differentiated global leader in animal health with integrated capabilities," stated Sequent CEO Rajaram Narayanan.

Narayanan stated that the combination will enhance Sequent's research and development capabilities.

"We believe that in order to continue to deliver differentiated value to our customers in times to come, it is imperative to scale up our product development and R&D capabilities to capture the market opportunity we are seeing and to build on our leadership in the Animal health market".

Haribabu Bodepudi, Viyash's founder and former chief operational officer of multinational drug company Mylan (now known as Viatris), praised the pairing.

"This merger brings together two complementary businesses that share a commitment to innovation, operational excellence, and providing world-class solutions to our customers," stated Haribabu Bodepudi, Viyash's current CEO.

According to the statement, each Viyash Life Sciences shareholder will get 56 Sequent Scientific equity shares for every 100 Viyash shares owned. Sequent Scientific's capital base will increase from 24,94,80,995 to 42,89,38,532 shares. The promoter and promoter group will own about 62.4% of the merged firm.

At Thursday's closing price, the merged entity's valuation with the expanded capital base will be roughly Rs. 8192 crore.

The two companies want to use each other's global marquee client base and technological expertise, they added. The combination is intended to broaden its marketing reach across continents, improve backward integration, and provide procurement synergies.

According to the declaration, Viyash is already a qualified supplier of intermediates to Sequent for one of the company's biggest active pharmaceutical ingredients (API) for the US market.

The merged firms will have 16 production plants, ten of which are US Food and Drug Administration-approved.

JM Financial and Ernst & Young served as financial consultants to Sequent Scientific and Viyash Life Sciences, respectively, throughout the transaction. Sequent Scientific was advised by the law firm AZB & Partners, while Trilegal advised Viyash Life Sciences. KPMG and PwC were independent valuers, while ICICI Securities supplied a fair opinion on the valuers' suggested swap ratio, as stated in the stock market notice.