DEFA14A: Avid Bioservices Urges Stockholders to Approve Acquisition by GHO and Ampersand

Avid Bioservices files an investor presentation highlighting the benefits of its proposed acquisition by GHO Capital Partners and Ampersand Capital Partners, urging stockholders to vote in favor of the transaction.

Summary

• Avid Bioservices has posted an investor presentation regarding its pending acquisition by GHO Capital Partners and Ampersand Capital Partners.
• The presentation highlights that the transaction delivers significant, immediate, and certain cash value to Avid stockholders.
• The transaction offers a 63.8% premium to the company's share price as of June 4, 2024.
• The implied multiples of the transaction exceed those of selected publicly traded comparable companies.
• The transaction provides a 24.9% premium to the midpoint of Avid's discounted cash flow analysis.
• The Avid Board of Directors believes the process maximized value for stockholders, rejecting initial proposals before engaging in further discussions and authorizing outreach to other potential parties.
• The board directed Moelis to run a process that included 24 strategic and financial parties.
• The competitive process included seven parties conducting diligence under NDA and two preliminary bids.
• The transaction de-risks Avid's future as a standalone company, considering challenges facing the biologics manufacturing industry.
• More funding and investment are needed to capitalize on the company's growth potential.
• Financial analysis indicates that Avid's growth prospects were below its previous guidance and analysts' consensus.
• The Special Meeting to vote on the transaction is scheduled for January 30, 2025.
• The Avid Board of Directors unanimously recommends that Avid stockholders vote FOR the proposed transaction.
• Moelis & Company LLC is serving as exclusive financial advisor, and Cooley LLP is serving as legal counsel to Avid.

Sentiment

Score: 8

Explanation: The document presents a positive outlook regarding the acquisition, emphasizing the benefits for stockholders and the de-risking of the company's future. The tone is optimistic and supportive of the proposed transaction.

Positives

• The transaction delivers significant, immediate, and certain cash value to Avid stockholders.
• The transaction offers a substantial premium to the company's share price.
• The Board of Directors conducted a robust process to maximize value for stockholders.
• The transaction de-risks Avid's future as a standalone company.

Negatives

• Avid's growth prospects were below its previous guidance and analysts' consensus.
• More funding and investment are needed to capitalize on the company's growth potential.
• The biologics manufacturing industry faces challenges that the market had already priced in prior to the sale announcement.

Risks

• The timing, receipt, and terms of required governmental and regulatory approvals could delay or cause abandonment of the transaction.
• Events, changes, or circumstances could lead to termination of the merger agreement.
• Stockholders may not approve the proposed transaction.
• The parties may not be able to satisfy the conditions to the proposed transaction in a timely manner or at all.
• The transaction could disrupt management time from ongoing business operations.
• Announcements relating to the transaction could adversely affect the market price of Avid's common stock.
• Unexpected costs or expenses could result from the proposed transaction.
• Litigation relating to the transaction could arise.
• The transaction could adversely affect the company's ability to retain and hire key personnel and maintain relationships with stakeholders.

Future Outlook

The document focuses on the pending acquisition of Avid Bioservices by GHO Capital Partners and Ampersand Capital Partners and urges stockholders to vote in favor of the transaction. It highlights the benefits of the transaction for stockholders and de-risks the company's future.

Management Comments

• The Avid Board of Directors unanimously recommends that Avid Stockholders Vote FOR the proposed transaction with GHO and Ampersand.

Industry Context

The document mentions challenges facing the biologics manufacturing industry, suggesting that consolidation or acquisition is a strategic move in response to these industry dynamics. Comparable companies listed are Bachem, Catalent, Lonza, Oxford Biomedica and PolyPeptide.

Comparison to Industry Standards

• The transaction's implied multiples exceed the trading multiples of selected publicly traded comparable companies including Bachem, Catalent, Lonza, Oxford Biomedica and PolyPeptide.
• The transaction delivers a meaningful premium relative to the Company's intrinsic value, representing a 24.9% premium to the midpoint of the Company's discounted cash flow analysis based on managements probability-adjusted five-year plan, which is significantly higher than the consensus of its peers.

Stakeholder Impact

• Stockholders are expected to receive significant cash value and a premium for their shares.
• The transaction could impact employees, customers, vendors, and partners, although the specific effects are not detailed.

Next Steps

• Stockholders are urged to vote on the proposed transaction.
• The Special Meeting to vote on the transaction is scheduled for January 30, 2025.

Key Dates

Keywords

Avid Bioservices, acquisition, GHO Capital Partners, Ampersand Capital Partners, merger, stockholders, CDMO, transaction, premium, biologics