Shares in life sciences research tools Abcam (ABC:AIM) gained 2% to £13.86 after the company agreed to acquire BioVision for $340 million in cash.
The company said that Biovision is a fast-growing distributer of life science tools to biopharma firms and diagnostic and academic customers.
Biovision specialises in cellular assays and epigenetics which is the study of heritable changes to a gene’s DNA structure that doesn’t involve changes to the DNA sequence.
It has been a third-party supplier to Abcam since 2003 with sales more than doubling over the past five years.
STRONG FIT, EARNINGS ENHANCING
The company said the acquisition presents a compelling strategic fit with potential to accelerate its ambitions within the adjacent biochemical and cellular assay market. It is expected to be earnings enhancing in the first year of ownership.
Numis analyst Stefan Hamill said the deal ‘strategically represents a key step forward into an adjacent vertical for the company’ adding ‘on a pro-forma basis we estimate the deal would add about 3p in earnings per share in 2022’, representing an uplift of around 10% to earnings.
The acquisition is subject to regulatory approval. It is expected to complete by the end of 2021 and will be funded from existing cash resources and a partial drawdown from the firm’s £200 million revolving credit facility.
Hamill said the deal price is in line with recent valuations in a ‘well rated’ sector with average price to historic earnings before interest of 27 times.
Abcam is nearly two years into executing its plan to achieve revenues of between £450 million and £500 million by 2024.
