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

Avid Bioservices has entered into a definitive agreement to be acquired by funds managed by GHO Capital Partners and Ampersand Capital Partners in an all-cash transaction valued at approximately $1.1 billion.

Summary

• Avid Bioservices has agreed to be acquired by GHO Capital Partners and Ampersand Capital Partners for $12.50 per share in cash, valuing the transaction at approximately $1.1 billion.
• The purchase price represents a 13.8% premium to Avid's closing share price on November 6, 2024, and a 21.9% premium to the company's 20-day volume-weighted average share price.
• The transaction is expected to close in the first quarter of 2025, pending stockholder and regulatory approvals.
• The deal is not subject to a financing condition.
• Upon completion, Avid Bioservices will become a private company and its stock will no longer be listed on NASDAQ.

Sentiment

Score: 8

Explanation: The sentiment is positive due to the all-cash acquisition at a premium, indicating a favorable outcome for Avid Bioservices' shareholders. The involvement of experienced private equity firms also suggests a positive outlook for the company's future.

Positives

• The acquisition provides Avid Bioservices' stockholders with significant, immediate, and certain cash value.
• GHO Capital and Ampersand Capital Partners bring significant knowledge, network, and capital to support Avid's future growth.
• The transaction is not subject to a financing condition, increasing the certainty of closing.

Risks

• The transaction is subject to customary closing conditions, including stockholder and regulatory approvals, which could delay or prevent the closing.
• There is a risk of litigation relating to the proposed transaction.
• The proposed transaction and its announcement 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.

Future Outlook

The transaction is expected to close in the first quarter of 2025, subject to customary closing conditions. Avid Bioservices will continue to operate under its current name and brand.

Management Comments

• Nick Green, president and CEO of Avid Bioservices, stated that the transaction provides stockholders with significant, immediate, and certain cash value and allows the company to build on its strong foundation with access to GHO Capital and Ampersand Capital Partners' knowledge, network, and capital.
• Alan MacKay and Mike Mortimer, Managing Partners of GHO, stated that Avid operates in high-growth markets and that GHO will support Avid's management team going forward.
• David Anderson, General Partner of Ampersand, stated that they have tremendous respect for Avid's teams expertise, its broad spectrum of customized services and its strong regulatory track record.

Industry Context

The acquisition reflects continued private equity interest in the CDMO sector, driven by the increasing demand for outsourced development and manufacturing services in the biopharmaceutical industry.

Comparison to Industry Standards

• The transaction's enterprise value of 6.3x FY2025E revenue is within the range of recent CDMO acquisitions, but specific comparisons would require a more detailed analysis of Avid's growth prospects, profitability, and competitive positioning.
• Comparable companies include Catalent, Thermo Fisher Scientific (with its CDMO division), and Lonza, although these are significantly larger and more diversified businesses.

Stakeholder Impact

• Shareholders will receive $12.50 per share in cash.
• Avid Bioservices will become a private company.
• The company will continue to operate under the Avid name and brand.
• The acquisition is expected to support the company's next phase of growth.

Next Steps

• The Company intends to file a proxy statement with the SEC.
• Avid's stockholders will 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, Avid Bioservices, CDMO, GHO Capital Partners, Ampersand Capital Partners, merger, biologics, pharmaceutical, contract manufacturing, biotechnology