DEFA14A: Avid Bioservices to be Acquired by GHO Capital and Ampersand Capital for $1.1 Billion

Avid Bioservices has entered into a definitive agreement to be acquired by GHO Capital Partners and Ampersand Capital Partners for $12.50 per share in cash, valuing the transaction at $1.1 billion.

Summary

• Avid Bioservices has agreed to be acquired by GHO Capital Partners and Ampersand Capital Partners.
• The acquisition price is $12.50 per share in cash.
• The transaction is valued at approximately $1.1 billion.
• The purchase price represents a 13.8% premium to Avid's closing share price on November 6, 2024.
• It also represents a 21.9% premium to the company's 20-day volume-weighted average share price as of the same date.
• The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and regulatory approvals.
• Upon completion, Avid's common stock will no longer be publicly traded.
• The company's board of directors unanimously approved the merger agreement.
• There is no financing condition or 'go-shop' provision included in the agreement.
• Until the transaction closes, it is business as usual at Avid Bioservices.

Sentiment

Score: 8

Explanation: The sentiment is positive due to the acquisition at a premium, providing immediate value to shareholders and potential for future growth under new ownership. The transaction is expected to benefit the company's operations and strategic direction.

Positives

• The acquisition provides stockholders with significant, immediate, and certain cash value for their shares.
• Becoming a private company will allow Avid to redirect resources toward its business instead of public company requirements.
• GHO Capital and Ampersand bring sector expertise and a track record of unlocking value in the CDMO sector.
• The acquisition is expected to support Avid's next phase of growth.

Negatives

• Avid's common stock will no longer be listed on any public stock exchange upon completion of the transaction.
• The company will cease to be an SEC-reporting company after the transaction closes.

Risks

• The transaction is subject to customary closing conditions, including stockholder approval and regulatory approvals.
• There is a risk that the required governmental and regulatory approvals may not be obtained, potentially delaying or preventing the transaction.
• The occurrence of any event, change, or other circumstances could give rise to the termination of the merger agreement.
• The proposed transaction could have an adverse effect on the ability of the company to retain and hire key personnel and to maintain relationships with customers, vendors, partners, employees, stockholders and other business relationships and on its operating results and business generally.
• Litigation relating to the proposed transaction could arise.

Future Outlook

The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions and regulatory approvals; upon completion, Avid will operate as a private company.

Management Comments

• After years of investment and expansion, we believe that now is the right time to move forward as a private company with new owners that will support our next phase of growth.
• With their combined sector specialism, strong track record of unlocking value and significant industry experience, we will be able to build on and extend Avids commitment to producing the biologics that contribute to creating life-saving therapies.

Industry Context

The acquisition reflects the ongoing trend of private equity firms investing in the CDMO (Contract Development and Manufacturing Organization) sector, seeking to leverage the increasing demand for biologics manufacturing and development services.

Comparison to Industry Standards

• The 6.3x multiple to consensus FY2025E revenue is within the range of recent CDMO transactions, but the specific multiple depends on growth rate, profitability, and strategic value.
• Comparable companies in the CDMO space include Catalent, Lonza, and Thermo Fisher Scientific, which have seen similar acquisition interest and valuation multiples in the past.
• The premium offered to Avid's share price is also within the typical range for acquisitions of publicly traded companies.

Stakeholder Impact

• Shareholders will receive $12.50 per share in cash.
• Employees are expected to continue their day-to-day responsibilities with a focus on customer needs.
• Customers, suppliers, and regulators are assured that it is business as usual during the transition period.

Next Steps

• The Company intends to file a proxy statement with the SEC.
• A special meeting of stockholders will be held to vote on the proposed transaction.
• The parties will seek required regulatory approvals.
• The companies will continue to operate independently until the transaction is finalized.

Key Dates

Keywords

acquisition, merger, CDMO, GHO Capital Partners, Ampersand Capital Partners, Avid Bioservices, private equity, biologics, pharmaceutical, transaction