GCIOpen Orphan to merge with hVIVO
announced on Monday it intends to merge with AIM-listed in an all share reverse takeover deal that values hVIVO at £12.96 million.
hVIVO is a clinical development services business that develops human disease models based on virology, which was established in 1989 as a spin-out from Queen Mary University, London.
Open Orphan has proposed a deal of 2.47 New Open Orphan shares for every 1 hVIVO Share, implying an offer of 15.56p per hVIVO Share, representing a 33.8% premium.
The rationale for the deal is that both firms ‘share a similar vision’ for the future of European Clinical Research Organisations, with the combination of the two hoped to result in synergies and complementary services with ‘limited overlap in existing customers or capabilities’, Open Orphan said.
Commenting, Cathal Friel, CEO of Open Orphan, said: "The merger of Open Orphan and hVIVO is a key milestone in the execution of our strategy to become a larger-scale specialist pharma services business and in complementary segments where specialist skills and know-how command higher margins.”
He added: “The merger allows the combined business to maximise shareholder value through delivering cost and revenue synergies across the businesses and one that is better positioned to consistently capture greater market share as part of a properly profitable business with losses confined to the past."
Open Orphan also announced it plans to raise £10 million in a placing, with £2.5 million underwritten by Cathal Friel’s firm Raglan Capital.
Shares in Open Orphan were trading 3.9% lower on Monday at 5.55p
If the deal were to go through hVIVO shareholders would own 44.67% of the enlarged group.
Commenting, Dr. Trevor Philips, Executive Chairman of hVIVO, said: "The hVIVO Board believes this transaction offers our shareholders the opportunity to participate in a larger business with greater growth potential, diversified risk and a competitive market position.”
He added: “Together, we share a similar vision for the future of European CROs and an entrepreneurial approach to developing further the Enlarged Group through a focus on operational efficiency, organic growth and targeted acquisitions to expand geographic and service capabilities."
Both hVIVO & Open Orphan recommended shareholders accept the offer.
Shares in hVIVO were trading 6.45% higher at 12.38p on Monday
Open Orphan told investors that hVIVO’s insight into the design, execution and analysis of viral challenge models ‘created a wealth of expertise’ that is invaluable to companies seeking to develop new products targeting Flu, RSV, HRV, cough, asthma and COPD.
Open Orphan said the deal would allow for a complementary broader in-house clinical service offering, opportunities to increase margins and service revenues, and allow for the commercialisation of hVIVO’s database through the Open Orphan platform.
Should the deal go through, Dr. Trevor Philips of hVIVO is to become CEO of the group, with Cathal Friel as executive chairman.
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