Alliance Pharma agrees to a £350m takeover by the US fund manager
- Alliance Pharma said its investors would receive 62.5p per share under the deal
- DBAY believes that Alliance’s listing costs will impact its long-term growth
Alliance Pharma has agreed to a £350 million takeover by its largest shareholder, asset management group DBAY Advisors.
The drugmaker said its investors would receive 62.5 pence per share under the deal, a 40.9 percent premium to Thursday’s closing price.
The proposal is also more than double the closing price of 29.4 pence recorded in May 2024 when Alliance announced the departure of its CEO and a third delay in publishing its 2023 results in five weeks.
Alliance’s new boss, Nick Sedgwick, has since carried out a review to update the company’s strategy and formulate a plan to drive long-term organic growth.
Company executives said the new plan had several uncertainties and would require “significant time and investment” to realize its potential benefits.
They also said DBAY’s backing and private capital will allow Alliance to “return to its acquisition strategy more quickly than if it remained in the public market.”
Goods: Alliance Pharma specializes in making products for consumer healthcare categories with few major competitors, such as eczema, scar care and eye health
Alliance has historically expanded through acquisitions financed by equity placements, but has completed no such deals in the past two years.
The AIM-listed group blamed this on high debt, operational challenges, a ‘restrictive financing environment’ and the falling share price.
DBAY believes that the cost of Alliance’s stock market listing affects Alliance’s ability to prioritize long-term growth and does not deliver “significant benefits” to the company given current liquidity levels.
It added that the company will need “time away from the public markets” and additional sources of financing to realize its growth potential.
Camillo Pane, non-executive chairman of Alliance, said: “DBAY’s offer today represents attractive and secure cash value for our shareholders.”
She added that Alliance’s new owners will provide “operational expertise and significant additional capital to accelerate its growth strategy through increased investments in new product innovation and development, mergers and acquisitions and expansion into new markets.”
Alliance Pharma shares was up 37.5 percent to 61p just before midday after the deal was announced.
The acquisition is expected to close in the first half of 2025, subject to shareholders representing at least 75 percent voting in favor at a general meeting.
Headquartered in Chippenham, Wiltshire, Alliance achieved transparent turnover of £183m last year, as well as underlying pre-nasties profits of £45m.
It specializes in making products for consumer healthcare categories with few major competitors, such as eczema, scar care and eye health.
Alliance has sought to reduce its dependence on China, where it makes about 30 percent of its sales, in favor of smaller, more regular orders.
The proposed takeover comes amid a wave of foreign companies taking advantage of low valuations to buy London-listed companies cheaply.
British companies worth £145 billion were closed down in 2024, a 51 percent increase on the previous year, according to the London Stock Exchange Group.
Those that fell into foreign hands included cybersecurity specialist Darktrace, music rights investor Hipgnosis Songs Fund, video game services provider Keywords Studios and energy infrastructure provider Smart Metering Systems.
Others to agree takeover deals included soft drinks seller Britvic, investment platform Hargreaves Lansdown and Royal Mail owner International Distribution Services.
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