Avid Bioservices to go private in $1.1bn private equity deal

Anglo-US contract development and manufacturing organisation (CDMO) Avid Bioservices has agreed a deal to be acquired by private equity firms GHO Capital Partners and Ampersand Capital Partners.

The deal – thought to be one of the largest take-private transactions in the CDMO sector in recent years – will support the growth of Nasdaq-listed Avid in its "next phase" ,according to the company's president and chief executive, Nick Green.

"In evaluating this transaction, our board considered a range of alternatives and determined that it provides our stockholders significant, immediate, and certain cash value for their shares," he added.

Going private means that companies do not have to comply with sometimes costly and time-consuming financial regulatory requirements, freeing up resources for things like R&D and capital investments, as well as management time.

Avid Bio provides clinical and commercial manufacturing services to the biotech and biopharma industries, focusing on clinical and commercial drug substance manufacturing, bulk packaging, release and stability testing, and regulatory submissions support for traditional biologics, as well as cell and gene therapies.

In its recent first-quarter results for fiscal 2025, the company recorded revenues up 6% to around $40 million, with a net loss rising to $5.5 million from $2.1 million a year earlier, and $219 million in booked contracts, including $66 million in new wins.

That was a "record high" for the business and comes off the back of investments in infrastructure, facilities, capacity, and capabilities over the last few years, according to Green, and the company is now projecting full-year revenues of up to $168 million.

One of its stated ambitions is to diversify its contracts by growing the proportion taken by large pharma companies with programmes heading for the commercial stage of production, which generally requires CDMOs to have specialty technical knowledge that gives them a competitive edge over rivals.

In a joint statement, GHO managing partners Alan MacKay and Mike Mortimer said: "Avid's recent investments, both in capacity and its exemplary team, position it strongly for future growth," noting that it now operates in "high-growth markets, producing complex biologics […] at both the clinical and commercial stages."

The $12.50-per-share takeover has been approved by Avid's board and is scheduled to close in the first quarter of 2025, subject to Avid shareholder approval and meeting the usual regulatory conditions. Shares in the company rose 4% after the deal was announced and another 12% in after-hours trading.

Spain's Laboratorios Farmacéuticos Rovi said in the summer it was considering the sale of its CDMO unit to a group of suitors that included private equity players – seeking a price rumoured to be worth around $3.75 billion – but recently said it would retain the business in-house.