- Alliance Pharma said its investors would receive 62.5p per share under the deal
- DBAY believes the cost of Alliance’s public listing impacts its long-term growth
Alliance Pharma has agreed to a £350million takeover by its biggest shareholder, asset management group DBAY Advisors.
The drug manufacturer said its investors would receive 62.5p per share under the deal, a 40.9 per cent premium to its closing share price on Thursday.
The proposal is also more than double the 29.4p closing price recorded in May 2024 when Alliance announced the departure of its chief executive and a third delay to the publication of its 2023 results in five weeks.
Alliance’s new boss, Nick Sedgwick, has since been conducting a review to update the company’s strategy and formulating a plan to boost its long-term organic growth.
Directors at the business said the new plan had multiple uncertainties and would take ‘significant time and investment’ to achieve its potential benefits.
They also said DBAY’s support and private capital will enable Alliance to return to its acquisition strategy ‘more quickly than if it remained on the public market’.
Goods: Alliance Pharma specialises in making products for consumer healthcare categories with few major competitors, like eczema, scar care and eye health
Alliance has traditionally expanded through takeovers funded by equity placings but has not completed any such deals over the past two years.
The AIM-listed group blames this on high debts, operational challenges, a ‘restrictive funding environment’, and a declining share price.
DBAY believes the cost of Alliance’s public listing hurts its ability to prioritise long-term growth and did not provide ‘significant benefits’ for the company given its current liquidity levels.
It added that the firm ‘needs time away from the public market’ and extra financing sources in order to fulfil its growth potential.
Camillo Pane, non-executive chairman of Alliance, said: ‘The offer from DBAY represents an attractive and certain value in cash today for our shareholders.’
She added that Alliance’s new owners will provide ‘operational expertise and significant additional capital to accelerate its strategy to grow through increased investment in new product innovation and development, M&A and expansion into new markets’.
Alliance Pharma shares had jumped 37.5 per cent to 61p just before midday following the deal’s announcement.
The takeover is set to be finalised in the first half of 2025, dependent on shareholders representing at least 75 per cent voting in favour at a general meeting.
Headquartered in Chippenham, Wiltshire, Alliance enjoyed see-through revenue of £183million last year, as well as underlying earnings before nasties of £45million.
It specialises in making products for consumer healthcare categories with few major competitors, like eczema, scar care and eye health.
Alliance has been looking to reduce its dependence on China, where it derives around 30 per cent of its sales, in favour of smaller, more regular orders.
Its proposed takeover comes amidst a frenzy of overseas companies taking advantage of depressed valuations to buy London-listed firms on the cheap.
British businesses worth £145billion were snapped up in 2024, a 51 per cent rise on the previous year, according to the London Stock Exchange Group.
Among those who 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 acquisition deals were soft drinks seller Britvic, investment platform Hargreaves Lansdown, and Royal Mail owner International Distribution Services.
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