Horizon Discovery has rejected a £270 million ($367 million) takeover bid from Abcam. The gene editing specialist issued a strongly-worded rebuttal of the offer after Abcam went public with its plan, calling the bid “highly opportunistic” and repudiating the strategic rationale for the merger.
Abcam, a Cambridge, U.K.-based provider of research tools and reagents, put a £1.81 all-stock offer to Horizon’s board last month. Horizon met with Abcam to discuss the offer but emerged from the meeting seeing “little strategic rationale for combining the two companies.” With Horizon’s board also believing the bid “fundamentally undervalues” the company, it rejected the offer.
In response, Abcam went public with its takeover plans to encourage Horizon to enter into talks. Abcam’s pitch to Horizon’s shareholders talked up the merits of the merger, arguing that it would accelerate the growth of the gene-editing specialist and allow both Cambridge-based businesses to expand globally.
There is little indication Horizon shares Abcam’s enthusiasm for the merger, although that may change if the numbers attached to it grow. Horizon sees the original offer as a lowball, “highly opportunistic” bid.
The “opportunistic” retort has some basis in fact. While Abcam focused on its offer’s 26% premium over Horizon’s May 1 closing price, the gene-editing specialist looked further back to suggest the bid is weak. The premium over Horizon’s three-month average is 10%. And when six months of trading data are factored in, Abcam’s bid comes in under the volume-weighted average price.
Horizon traded for around £2.50 a share for much of the second half of last year but has seen its value tumble over the first four months of 2018. The decline covers a period in which Darrin Disley, Ph.D., stepped down as CEO after more than a decade in charge. Under Disley’s leadership, Horizon went public and made a string of acquisitions, becoming a global player in the process.
Abcam underwent a similar rise some years earlier under the leadership of Jonathan Milner, Ph.D., establishing the company as a leading provider of affinity binders, reagents, biomarkers and assays.
Milner is one of many existing links between the two companies. Having added to his stake last month, the Abcam co-founder owns 7% of Horizon. As a director and shareholder of both companies, Milner has sat out discussions about the takeover at both companies.
Shares in Horizon jumped to above the price of Abcam’s bid on the back of news of the offer.