Gene editing company Horizon Discovery (HZD) is up 10% to 235.9p as it agrees to acquire GE Healthcare Dharmacon from General Electric for £65m ($85m).
It plans to raise £80m by issuing new shares at 205p, while General Electric will indirectly have an 8.8% stake in the company through a subsidiary.
Dharmacon is a global leader in RNAi products and has a fast growing gene editing product portfolio.
SIGNIFICANT MOVE
It is a significant move for the Horizon as Dharmacon’s technology will accelerate its route into gene manipulating, RNA interference tools and genetic editing services.
Horizon can also take advantage of the firm’s eCommerce platform and global distribution channels.
The acquisition is ‘immediately financially accretive to earnings’ and is expected to generate significantly more revenue and cost synergy potential according to Horizon.
It is expected to boost return on investment capital by 10% by 2020.
Stockbroker Panmure Gordon analyst Mike Mitchell is optimistic about the takeover as it should give better access to the global academic and government research base.
‘The deal appears to speak strongly to Horizon’s previously stated ambitions regarding M&A and its aim to deliver a business focused 80/20 on products/services,’ says Mitchell.
'COMPLEMENTARY AND SYNERGISTIC'
N+1 Singer analyst Dr Jens Lindqvist says the deal is ‘complementary and synergistic’.
He highlights that the funds will also be used to support accelerated growth, gross margin expansion, to exploit synergies to drive profitability and strengthen the balance sheet.
