Ergomed aims to go private via £703m Permira takeover
UK biopharma services company Ergomed will be taken into private hands with a takeover by a subsidiary of investment group Permira that values the company at around £703 million ($888 million).
Shares in the London-listed company shot up by more than a quarter this morning after the news emerged to reach 1,332p, just shy of the 1,350p per share offer made by Permira's Eden AcquisitionCo.
Permira is also offering an alternative to the cash offer that would consist of a smaller cash amount (451p), plus unlisted securities.
The deal – which has been recommended by Ergomed's board – comes almost a decade after Ergomed first made its debut on the London exchange and after several years of expansion fuelled by acquisitions, most recently a £26 million takeover of regulatory affairs consultancy ADAMAS last year.
Those helped revenues rise 23% to £145 million last year, and analysts at Edison recently predicted the company could be approaching £390 million in revenues by the end of the decade.
Ergomed traditionally operated a dual business strategy, on the one hand operating as a contract research organisation (CRO) providing drug development and pharmacovigilance (PV) services to other drug developers on a fee-paying basis, and on the other hand acting as a co-development partner for certain projects, with costs shared with other drug developers.
The latter side of the business was shut down in 2018, however, and Ergomed turned all its attention to the CRO and PV side of the business, which was proving to be more profitable. On the contract research side, Ergomed focuses particularly on oncology and rare diseases, both areas that are proving resilient to the recent downturn in biotech funding.
Permira said it had decided to make a move for Ergomed because the company is a "differentiated platform" in the pharma outsourcing category and operates in "growing markets, benefitting from tailwinds of increasing complexity, regulatory requirements, and outsourcing rates."
The private equity group added that Ergomed will be able to achieve its potential more easily as a private group, promising to support the company's next phase of growth with investment in its technological and commercial capabilities and possibly "transformational" M&A.
"We believe the acquisition by the Permira Funds now represents an excellent opportunity for Ergomed shareholders to realise value at a highly attractive valuation and at the same time allow Ergomed to most effectively deliver against its ambitious growth strategy," said Ergomed's founder and executive chairman, Miroslav Reljanović.