US pharmaceuticals firm Upsher-Smith Laboratories (USL) is making an agreed bid for UK neuroscience research firm Proximagen.
Under the agreement, Proximagen shareholders will receive 320p in cash for each Proximagen share, as well as a further 192p in cash or loan notes by way of a contingent value right (CVR).
Excluding the CVRs the offer values Proximagen fully diluted share capital at around £223m, a cash premium of 16.4% to the closing price of 275p per share on June 12th, or 84.6% to the average closing price of 173p during the six months to that date. Including the CVRs the company is valued at around £356.8m.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Proximagen shareholders will receive one CVR for each Proximagen share that they hold. The CVR is intended to enable shareholders to share in the future success of two existing Proximagen programs, VAP-1 and PRX00933.
The acquisition is being funded through Upsher-Smith's cash funds and new debt facilities.
Proximagen unveiled its intermin results on the same day as the announcement, revealing widening losses and declining revenues for the half year period to May 31st.
Loss before tax rose from £3.65m to £4.55m year-on-year, while revenue fell from £0.19m to £0.13m. Finance income increase slightly from £0.25m to £0.31m. Basic losses per share were 6.3p (2011: 5.5p).
Total operating costs increased from £4.06m to £4.99m, while cash levels rose £3.25m to £48.0m.
Intellectual property development firm IP Group, which has a 7.6% stake in Proximagen Group, has welcomed the acquisition news.
The cash element would represent a multiple of 35 times IP Group's total investment in Proximagen of around £0.4m or a multiple of up to 57 times including the CVRs.
Who is the richest person in the world?
The top five richest people in the world have a combined net worth of $825 billion. Who takes the crown for the richest person in the world?
By Vaishali Varu Published
Top 10 stocks with highest growth over past decade - from Nvidia, Microsoft to Netflix, which companies made you the most money?
We reveal the 10 global companies with the biggest returns since 2013. One firm has posted an astonishing 9,870% return, meaning a £1,000 investment would now be worth almost £82,000.
By Ruth Emery Published