Amgen has announced a recommended cash offer for Nuevolution’s shares of SEK32.50/share, valuing the company at approximately SEK1,610m (US$167m). The offer represents a 169% premium to the closing price (SEK12.10) on 21 May (the day before the announcement) and a 69% premium to the highest trading price (SEK19.26) over the 52-week period (before 21 May 2019). Nuevolution’s board has unanimously recommended that shareholders accept the offer. The offer is not subject to any financing conditions and is funded by cash on hand. The settlement of the offer is expected to take place on or around 15 July. We note the offer represents a 57% premium to our previously published valuation of SEK20.7/share.
Written by
Nuevolution |
Amgen offers SEK32.50/share in cash |
Amgen offer |
Pharma & biotech |
29 May 2019 |
Share price performance
Business description
Next events
Analysts
Nuevolution is a research client of Edison Investment Research Limited |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Amgen has announced a recommended cash offer for Nuevolution’s shares of SEK32.50/share, valuing the company at approximately SEK1,610m (US$167m). The offer represents a 169% premium to the closing price (SEK12.10) on 21 May (the day before the announcement) and a 69% premium to the highest trading price (SEK19.26) over the 52-week period (before 21 May 2019). Nuevolution’s board has unanimously recommended that shareholders accept the offer. The offer is not subject to any financing conditions and is funded by cash on hand. The settlement of the offer is expected to take place on or around 15 July. We note the offer represents a 57% premium to our previously published valuation of SEK20.7/share.
Year end |
Revenue (SEKm) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/17** |
12.2 |
(123.8) |
(2.7) |
0.0 |
N/A |
N/A |
12/18** |
11.0 |
(107.3) |
(2.2) |
0.0 |
N/A |
N/A |
12/19e |
202.4 |
87.2 |
1.1 |
0.0 |
29.5 |
N/A |
12/20e |
336.6 |
220.9 |
2.9 |
0.0 |
11.2 |
N/A |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **Restated following change of year end.
Board of directors recommends acceptance of offer
Nuevolution’s board has unanimously recommended that shareholders accept the offer based on Nuevolution’s ‘present strategic and financial position and the Company’s expected potential future development and thereto related opportunities and risks’. Nuevolution’s three largest shareholders (Sunstone LSV Fund I, Skandinaviska Enskilda Banken and Stiftelsen Industrifonden), representing 71% of shares, have agreed to accept the offer subject to certain conditions. The completion of the offer is subject to the acceptance of it by shareholders such that Amgen becomes the owner of 90% of the total number of shares. The offer is conditional on factors that include but are not limited to clearance of all regulatory and governmental requirements.
Valued partnership turns to acquisition
Since 2016, both companies have been involved in a multi-target small molecule drug discovery collaboration valued at $410m per programme. Recently in 2018, Amgen opted in on two separate oncology programmes highlighting its confidence in Nuevolution’s technology. Amgen now aims to deepen this relationship by bringing the business in house to enable closer integration of Nuevolution’s technology and drug discovery expertise. Amgen does not intend to change how the business is operated including the composition of the management team (and key employees) or the business’s location.
Valuation: Offer at 57% premium to Edison valuation
Amgen has offered SEK32.50/share in cash for all of Nuevolution’s outstanding shares. The offer constitutes a 57% premium to our last published valuation of SEK20.7/share (Small molecules, big ambitions) on 19 March 2019.
Exhibit 1: Financial summary
Accounts: IFRS; year-end 31 December; SEK000s |
|
|
2017* |
2018* |
2019e |
2020e |
Income statement |
|
|
|
|
|
|
Total revenues |
|
|
12,222 |
10,973 |
202,369 |
336,646 |
Reported gross profit |
|
|
12,222 |
10,973 |
202,369 |
336,646 |
SG&A (expenses) |
|
|
(28,258) |
(28,489) |
(24,216) |
(24,458) |
R&D costs |
|
|
(107,331) |
(90,958) |
(91,868) |
(92,786) |
Adjusted EBIT |
|
|
(123,059) |
(106,108) |
86,286 |
219,402 |
Reported EBIT |
|
|
(123,059) |
(106,108) |
86,286 |
219,402 |
Finance income/ (expense) |
|
|
(778) |
(1,183) |
958 |
1,513 |
Adjusted PBT |
|
|
(123,837) |
(107,291) |
87,244 |
220,915 |
Reported PBT |
|
|
(123,837) |
(107,291) |
87,244 |
220,915 |
Income tax expense |
|
|
6,278 |
7,568 |
(30,535) |
(77,320) |
Adjusted net income |
|
|
(117,559) |
(99,723) |
56,709 |
143,595 |
Reported net income |
|
|
(117,559) |
(99,723) |
56,709 |
143,595 |
Earnings per share |
|
|
|
|
|
|
Basic EPS (SEK) |
|
|
(2.7) |
(2.2) |
1.1 |
2.9 |
Diluted EPS (SEK) |
|
|
(2.7) |
(2.1) |
1.1 |
2.7 |
Adjusted basic EPS (SEK) |
|
|
(2.7) |
(2.2) |
1.1 |
2.9 |
Adjusted diluted EPS (SEK) |
|
|
(2.7) |
(2.1) |
1.1 |
2.7 |
Average number of shares - basic (m) |
|
|
42.9 |
45.9 |
49.5 |
49.5 |
Average number of shares - diluted (m) |
|
|
43.7 |
46.8 |
52.8 |
52.8 |
Number of shares outstanding - end period (m) |
|
|
42.9 |
49.5 |
49.5 |
49.5 |
Balance sheet |
|
|
|
|
|
|
Property, plant and equipment |
|
|
6,340 |
5,178 |
5,419 |
5,648 |
Other non-current assets |
|
|
0 |
0 |
0 |
0 |
Total non-current assets |
|
|
11,674 |
10,759 |
11,000 |
11,229 |
Cash and equivalents |
|
|
114,758 |
111,101 |
166,568 |
308,934 |
Trade and other receivables |
|
|
0 |
0 |
0 |
0 |
Other current assets |
0 |
0 |
0 |
0 |
||
Total current assets |
|
|
125,084 |
123,527 |
178,994 |
321,360 |
Non-current loans and borrowings |
|
|
2,810 |
1,813 |
1,813 |
1,813 |
Total non-current liabilities |
|
|
2,810 |
1,813 |
1,813 |
1,813 |
Trade and other payables |
|
|
0 |
0 |
0 |
0 |
Current loans and borrowings |
|
|
1,375 |
1,243 |
1,243 |
1,243 |
Other current liabilities |
|
|
3,032 |
0 |
0 |
0 |
Total current liabilities |
|
|
22,857 |
16,696 |
15,696 |
14,696 |
Equity attributable to company |
|
|
111,091 |
115,777 |
172,486 |
316,080 |
|
|
|
|
|
|
|
Cash flow statement |
|
|
|
|
|
|
Profit before tax |
|
|
(123,837) |
(107,291) |
87,244 |
220,915 |
Depreciation of tangible assets |
|
|
1,770 |
1,860 |
259 |
271 |
Share based payments |
|
|
186 |
(118) |
0 |
0 |
Other adjustments |
|
|
778 |
1,183 |
(958) |
(1,513) |
Movements in working capital |
|
|
101,967 |
(5,385) |
0 |
0 |
Net cash from operating activities (pre-tax) |
|
|
(19,136) |
(109,751) |
86,545 |
219,673 |
Interest paid / received |
|
|
(788) |
(1,240) |
958 |
1,513 |
Income taxes paid |
|
|
(12,984) |
5,046 |
(30,535) |
(77,320) |
Cash from operations (CFO) |
|
|
(32,908) |
(105,945) |
56,967 |
143,866 |
Capex (includes acquisitions) |
|
|
(1,234) |
(266) |
(500) |
(500) |
Other investing activities |
|
|
(9) |
(28) |
0 |
0 |
Cash used in investing activities (CFIA) |
|
|
(1,243) |
(294) |
(500) |
(500) |
Net proceeds from issue of shares |
|
|
0 |
104,201 |
0 |
0 |
Other financing activities |
|
|
(1,412) |
(1,345) |
(1,000) |
(1,000) |
Cash from financing activities (CFF) |
|
|
(1,412) |
102,856 |
(1,000) |
(1,000) |
Increase/(decrease) in cash and equivalents |
|
|
(35,563) |
(3,383) |
55,467 |
142,366 |
Cash and equivalents at beginning of period |
|
|
147,682 |
114,758 |
111,101 |
166,568 |
Cash and equivalents at end of period |
|
|
114,758 |
111,101 |
166,568 |
308,934 |
Source: Edison Investment Research, Nuevolution accounts. Note: *Restated following change of year end.
|
|
Research: TMT
Mynaric is transitioning from a technology company delivering one-off prototypes to delivering reliable product suitable for multiple customers. It remains broadly on track for commercial roll-out in the airborne sector during FY19 and the space sector during FY20, thus positioning it as a key supplier to the mega-constellations of satellites and aerial platforms under development. Consensus estimates have been cut to reflect a more prudent view of delivery volumes.