(Alliance News) - Open Orphan PLC and hVIVO PLC on Monday said they have agreed terms on a reverse takeover, which would value the latter at GBP13.0 million.
Under the terms of the agreement, hVIVO shareholders will receive 2.47 new Open Orphan shares per hVIVO share. The deal values hVIVO shares at 15.56 pence each, a 34% premium to the clinical development services company's closing price of 11.62p on Friday.
hVIVO shares were trading 3.2% higher at 12.00p each in London on Monday morning. Drug consulting firm Open Orphan, also listed in London, was 13% lower at 5.00p each.
As the tie-up is deemed a reverse acquisition, Open Orphan needs the approval of its shareholders at a January 6 general meeting to confirm the deal.
Open Orphan said it expects to issue 205.5 million shares under the terms of the merger, with hVIVO shareholders owning just shy of 45% of the enlarged firm.
Open Orphan said: "Open Orphan and hVIVO are AIM-quoted groups that share a similar vision for the future of European Clinical Research Organisations and an entrepreneurial approach to developing further their business through a focus on operational efficiency, organic growth and targeted acquisitions to expand their geographic and service capabilities.
"The Open Orphan directors and the hVIVO directors believe that the combination of the businesses will result in synergies across the enlarged group with each business providing complementary services with limited overlap in existing capabilities and customers."
hVIVO's directors, which have backed the offer, hold a 0.3% stake in the company. Open Orphan shareholders, with an interest totalling roughly 30% of the firm, have also supported the tie-up.
Open Orphan Chief Executive Cathal Friel 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.
"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."
By Eric Cunha; ericcunha@alliancenews.com
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hVIVO (HVO)