Baar-based HBM BioVentures has offered 0.42 of its own shares plus an additional CHF3.60 in cash for each share of International BM Biomedicine (Biomedicine), a rival Basle-based life science investor.
According to a source at HBM, the transaction values the target at around CHF80 million (€52 million; $69 million). The board of directors of Biomedicine have recommended that shareholders in the company should accept the offer, which runs from today (10 December) until noon on 21 December.
Explaining the attractions of the deal, HBM chief financial officer Dr Joachim Rudolf told PrivateEquityOnline: “For Biomedicine, shareholders get access to a bigger and more cost-effective organisation, while for HBM it’s an attractive portfolio addition.” He said the intention post-completion is for Biomedicine to become a 100 percent subsidiary of HBM. Rudolf said employees of Biomedicine would not be transferring to HBM, and that they would be assisted “to find suitable alternatives”.
The combination of the two organisations will result in a Swiss-domiciled global life science investor with around CHF900 million under management, focused on US and European public and private equity investments mainly in the biopharmaceutical and medical technology sectors. Rudolf said the firm would have around 40 positions in private companies and 25 in public companies.
HBM’s first fund, which it raised in 2001, received total commitments of €500 million. It is currently raising a second fund, HBM BioVentures II, which is focused purely on private equity. Biomedicine, which was founded in 1997, had made 17 investments in life science companies as at June 30 2004. In April 2004, portfolio company Cytokinetics achieved an IPO on Nasdaq, raising nearly $90 million.
Rudolf said the combined entity would explore the possibility of an IPO once portfolio holdings were valued more realistically. He added this was an attraction of the deal for Biomedicine shareholders, as Biomedicine was forced to shelve its own IPO plans due to its lack of size and a downturn in capital markets sentiment. HBM shares are currently traded “over-the-counter”, a limited form of trading that takes place outside stock exchanges.
If successful, the deal would represent HBM’s second acquisition of a rival Swiss-based life science investor since it was formed nearly four years ago. In 2001, it acquired New Medical Technologies in a transaction valued at around CHF225 million.
Rudolf said the latest deal was part of an “ongoing” consolidation of life science investors, driven by the need for balance sheet heft in an environment not conducive to rapid exits. “IPO valuations have been depressed and it’s been tough to exit through that route. This means exits take longer and you need financial strength to keep supporting companies over many years. The size of the investment vehicle matters more than it used to.”