Avid Bioservices, a prominent contract development manufacturing organization (CDMO) specializing in biologic drugs, is set to transition to a private entity through a significant mergers and acquisitions deal, valuing the firm at an impressive $1.1 billion.
The acquisition is spearheaded by two notable private equity firms, GHO Capital Partners and Ampersand Capital Partners. As detailed in the official merger agreement released after the market closed on Wednesday, these firms will acquire Avid shares at a price of $12.50 per share in cash, reflecting a 13.8% premium over Avid’s closing stock price from that day. This transaction price also signifies a 21.9% premium when compared to Avid’s average stock price over the preceding 20 days prior to the announcement.
Based in Tustin, California, Avid Bioservices was originally the CDMO division of the former Peregrine Pharmaceuticals, which focused on developing antibody drugs for cancer treatment. In 2018, Peregrine made a strategic pivot, ceasing its drug research and development efforts to concentrate on CDMO operations under the Avid Bioservices brand. Today, Avid serves a diverse clientele that ranges from biotech firms to established pharmaceutical companies, supporting them from early development stages to full commercialization.
For the fiscal year ending April 30, 2024, Avid reported revenues amounting to $139.9 million, representing a 6.2% decline from the previous fiscal year. The company experienced a net loss of $26.9 million for fiscal 2024, a downturn attributed to a decrease in manufacturing runs, a contraction in process development services, and rising operational costs. Notably, Avid generates a significant portion of its revenue from a select group of clients, with its annual report revealing that the top three customers accounted for approximately 55% of total revenue in the latest fiscal year. The transaction price is estimated to be around 6.3 times Avid’s projected revenue for fiscal 2025.
In an official statement, Avid President and CEO Nick Green indicated that the CDMO’s board thoroughly evaluated various strategic options and determined that the acquisition by these private equity firms would provide shareholders with substantial, immediate, and certain cash value for their investments. In a message to employees following the acquisition announcement, Green emphasized that “now is the right time to transition into a private company with new owners who will support our next phase of growth.”
“With a transatlantic focus, GHO brings a collaborative approach to partnering with exemplary companies like ours,” Green elaborated. “GHO’s mission is to bolster innovation to provide better, faster, and more accessible healthcare solutions that positively impact patients, healthcare systems, and society as a whole. GHO possesses an in-depth understanding of the CDMO sector and has a proven track record in assisting businesses within our industry to increase their value. Ampersand, with over 30 years of experience, is a private equity firm dedicated to the life sciences sector, specifically focusing on healthcare and pharmaceuticals.”
Both GHO and Ampersand already have established CDMOs in their investment portfolios and have previously collaborated on CDMO transactions. Notably, in 2022, GHO and The Vistria Group took over CDMO Alcami from Ampersand and Madison Dearborn Partners, although the financial specifics of that acquisition were not disclosed.
The acquisition of Avid has received approval from the company’s board of directors but is still pending shareholder consent. Further details regarding a shareholder meeting are expected soon. The companies anticipate finalizing the transaction in the first quarter of 2025. Once completed, Avid will continue to operate under its established name and brand.
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