Strides Arcolab is in the limelight today, currently up over 4% at Rs.730.80 and this is after hitting an intra day high at Rs.748.35.

The company, in a surprise move, announce merger within itself of Shasun Pharma in an all-stock deal. As per the deal, Shasun shareholders will get five shares of Strides for every 16 held in Shasun. This explains why Shasun stock is not reacting positively. Post this, Shasun will own 26% stake in Strides and its current promoters will also become the promoters of the combined entity.

Also the big advantage is for Strides which will now have a new merged entity valued at Rs.2,500 crore. The company issued a Press Release and the group CEO Arun Kumar stated that this proposed combination with Shasun accelerates its strategy and growth prospects by creating a larger scale, integrated Indian pharma company with multiple growth drivers and synergies that will allow for enhanced profitability and more efficient use of its combined infrastructure and enhanced value creation opportunities for the combined shareholder group.

Post this merger, the new combined company will have a strong presence in finished dosages segment in regulated markets, branded generics in emerging markets, institutional business, active pharmaceutical ingredients and contract research and manufacturing services. Its pipeline is expected to now have over 100 products and it would hasten the product filings with its strong R&D presence.