SAN DIEGO - Halozyme Therapeutics , Inc. (NASDAQ: NASDAQ:HALO) announced today its intention to purchase Evotec SE (NASDAQ: EVO) for €11.00 per share, an all-cash deal valued at €2.0 billion. The transaction aims to establish a global pharma services leader, significantly diversifying and expanding Halozyme's business scope and financial prospects.
The proposed acquisition is expected to leverage Halozyme's existing technologies and Evotec's platforms to create a business with a broadened revenue base and enhanced growth potential. Halozyme's ENHANZE® drug delivery technology, together with Evotec's drug discovery and biologics manufacturing capabilities, is anticipated to provide cross-selling opportunities and foster long-term growth.
Halozyme projects approximately $2 billion in annual revenue for the combined entity by 2025, with a 15-20%+ compound annual growth rate (CAGR) from 2023A to 2028E. The company also forecasts a pro forma adjusted EBITDA margin between 45-50% by 2026, driven by the diversification and synergy of the two companies' services.
The funding strategy for the transaction involves Halozyme's cash reserves, projected to exceed $800 million by the end of 2024, and new debt, with the company maintaining a net leverage goal of less than 2x within two years following the closure of the deal. Halozyme's financial advisor, Centerview Partners, and legal advisor, Weil, Gotshal & Manges LLP, are assisting in the transaction.
This strategic move is aligned with Halozyme's merger and acquisition criteria, emphasizing a de-risked business model, a structurally similar business approach, and strong biopharma partnerships. It is designed to fortify Halozyme's position in the pharmaceutical services industry by combining its drug delivery technology with Evotec's continuous biologics manufacturing and drug discovery platforms.
The information presented is based on a press release statement, and the potential transaction remains subject to further negotiations and regulatory approvals. Halozyme's forward-looking statements reflect the company's expectations for future financial performance and the anticipated benefits of the acquisition, although actual results may vary due to market conditions and other factors.
In other recent news, Halozyme Therapeutics has proposed a $2 billion acquisition of pharmaceutical company Evotec SE. Piper Sandler, maintaining a neutral rating on Halozyme, perceives this potential merger as a strategic move that could expand Halozyme's service offerings to drug developers. However, the proposed acquisition is still subject to approval from Evotec's Management Board and Supervisory Board, and other regulatory approvals.
Evotec SE reported stable revenue of €575.7 million for the first nine months of 2024, largely due to a 74% revenue increase from the Just-Evotec Biologics sector. The company's adjusted EBITDA for 2024 is projected to be between €15 million and €35 million, with total revenues expected to range from €790 million to €820 million.
Evotec SE is also undertaking a transformation initiative, "Reset, Review, Restart," aiming to enhance efficiency and save €40 million. Additionally, the company has forged strategic partnerships with Sandoz (SIX:SDZ) and Novo Nordisk (NYSE:NVO) to bolster the order book for 2025. These are recent developments that continue to shape the trajectory of Evotec SE.
InvestingPro Insights
As Halozyme Therapeutics aims to acquire Evotec SE for €11.00 per share, it's crucial to examine Evotec's current financial position and market performance. According to InvestingPro data, Evotec's market capitalization stands at $1.96 billion, which aligns closely with the proposed €2.0 billion deal value.
Evotec's recent stock performance has been notably strong, with InvestingPro data showing a 68.94% price return over the past month and a 66.87% return over the last three months. This surge in stock price may reflect market anticipation of potential acquisition activities or improved company prospects.
However, it's important to note that Evotec is currently operating at a loss, with a negative operating income of $66.97 million over the last twelve months. This aligns with an InvestingPro Tip indicating that the company is not expected to be profitable this year. This financial situation could be a key factor in Evotec's openness to acquisition offers, as Halozyme's resources and technologies might help turn around Evotec's profitability.
Another relevant InvestingPro Tip suggests that Evotec operates with a moderate level of debt. This could be advantageous for Halozyme in structuring the acquisition deal and managing post-merger integration.
For investors seeking a deeper understanding of Evotec's financial health and market position, InvestingPro offers 11 additional tips, providing a comprehensive analysis to inform investment decisions in light of this potential acquisition.
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