8-K: Avid Bioservices Acquired by GHO Capital and Ampersand Capital Partners for $1.1 Billion, Delisting from NASDAQ

Avid Bioservices has been acquired by funds managed by GHO Capital and Ampersand Capital Partners in an all-cash transaction valued at approximately $1.1 billion, leading to its delisting from NASDAQ.

Summary

• Avid Bioservices, a biologics CDMO, has been acquired by funds managed by GHO Capital Partners and Ampersand Capital Partners for approximately $1.1 billion.
• The merger was completed on February 5, 2025, with Avid Bioservices becoming a wholly-owned subsidiary of Space Finco, Inc., owned by the acquiring funds.
• As a result of the merger, Avid Bioservices' common stock has been delisted from NASDAQ.
• Stockholders received $12.50 per share in cash.
• Holders of the company's 7.00% Convertible Senior Notes due 2029 have the right to require the company to repurchase their notes for cash.
• The repurchase price is equal to 100% of the principal amount plus accrued and unpaid interest.
• A Make-Whole Fundamental Change occurred, offering noteholders an increased conversion rate if they convert their notes within a specified period.
• The conversion rate during the Make-Whole Fundamental Change Conversion Period is equal to 113.7656 per $1,000 principal amount of Notes.
• The consideration due upon conversion of the Notes during the Make-Whole Fundamental Change Conversion Period will be an amount of cash equal to approximately $1,422.07 per $1,000 principal amount of Notes.

Sentiment

Score: 8

Explanation: The document conveys a positive sentiment due to the successful acquisition, the potential for future growth under new ownership, and the benefits offered to stockholders and noteholders.

Positives

• Stockholders received $12.50 per share in cash, representing a defined exit value.
• Noteholders have the option to have their notes repurchased at 100% of the principal amount plus accrued interest, providing a guaranteed return.
• The Make-Whole Fundamental Change offers noteholders an opportunity to convert their notes at an increased rate, potentially yielding a higher return.
• The acquiring firms, GHO Capital and Ampersand Capital Partners, bring expertise and resources to support Avid's future growth and expansion.

Negatives

• Avid Bioservices is no longer a publicly traded company, meaning investors can no longer participate in its future growth through stock ownership.
• The delisting from NASDAQ removes the liquidity and transparency associated with a publicly traded stock.

Risks

• The success of Avid Bioservices now depends on the strategic decisions and operational execution of its new owners, GHO Capital and Ampersand Capital Partners.
• Integration challenges may arise as Avid Bioservices transitions to becoming a wholly-owned subsidiary.
• Changes in the CDMO market or the broader biopharmaceutical industry could impact Avid Bioservices' future performance.

Future Outlook

GHO Capital and Ampersand Capital Partners plan to support Avid Bioservices' growth through expanded offerings, talent investment, and greater geographic reach. The company aims to enhance its capabilities, expand its service offerings, and deliver greater value to customers.

Management Comments

• Nick Green, President and CEO of Avid, stated that the acquisition marks an exciting milestone and that the new owners will provide access to resources that will accelerate growth.
• Alan MacKay and Mike Mortimer, Managing Partners of GHO, commented that Avid perfectly exemplifies a company operating in high-growth markets supporting the growing biotech sector.
• David Anderson, General Partner of Ampersand, added that the combination of their industry expertise with Avid's capabilities will deliver enhanced value and accelerate innovation for clients globally.

Industry Context

The acquisition reflects the ongoing consolidation and investment in the CDMO sector, driven by the increasing demand for biologics development and manufacturing services. Private equity firms are attracted to CDMOs due to their growth potential and strategic importance in the biopharmaceutical supply chain.

Comparison to Industry Standards

• The acquisition multiple of approximately $1.1 billion for Avid Bioservices is within the typical range for CDMO acquisitions, reflecting the company's established capabilities and growth prospects.
• Comparable companies in the CDMO space, such as Catalent and Lonza, have also attracted significant investment and acquisition interest, highlighting the attractiveness of the sector.
• GHO Capital's experience with other CDMO investments like Ardena and Sterling Pharma Solutions suggests a strategic approach to enhancing Avid's capabilities and market reach.

Management Changes

Corporate Governance

Stakeholder Impact

• Shareholders received $12.50 per share in cash.
• Noteholders have the option to have their notes repurchased or converted.
• Employees may experience changes as the company integrates with its new owners.
• Customers can expect continued service and potential enhancements to Avid Bioservices' offerings.

Next Steps

• Avid Bioservices will focus on integrating with its new owners and executing its growth strategy.
• Noteholders will need to decide whether to exercise their repurchase rights or convert their notes during the Make-Whole Fundamental Change Conversion Period.
• The company will work to enhance its capabilities, expand its service offerings, and deliver greater value to customers.

Key Dates

Keywords

Avid Bioservices, acquisition, CDMO, GHO Capital, Ampersand Capital Partners, merger, delisting, convertible notes, biologics, pharmaceutical