India Ratings & Research (Ind-Ra) has placed Strides Arcolab (Strides) 'A+' long-term issuer rating on Rating Watch Evolving (RWE).

The rating action follows Strides' announcement of merging Shasun Pharmaceuticals with itself in a share swap deal, referred to as 'transaction'. Post the merger, Strides shareholders will hold 76% of the combined entity while the rest will be held by Shasun's existing shareholders.

The RWE reflects that post-transaction, the business of Shasun, will be transferred to Strides which will lend the merged entity a stronger business profile with a vertically-integrated pharmaceutical manufacturing set-up in 12 manufacturing facilities. The resolution of the Rating Watch will be predicated on completion of the transaction, which is expected to happen by June 2015. The agency will also take into consideration the financials of the combined entity and its future business plans when resolving the Rating Watch.

Shares of the company gained Rs 31.8, or 4.46%, to trade at Rs 744.95. The total volume of shares traded was 371,145 at the BSE (2.49 p.m., Tuesday).