Leading provider of workflow, data and IT solutions to the life sciences industry Instem (INS:AIM) has agreed an 833p per share all-cash takeover from French private equity firm Archimed.

The proposed deal, fully recommended by the board of directors represents a 41% premium to yesterday’s (29 August) closing price of 590p and values Instem at approximately £203 million.

The shares jumped 40% to 825.1p in early trading suggesting investors believe the transaction will be approved by shareholders, which requires 75% support.

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WHY ARE DIRECTORS RECOMMENDING THE DEAL?

Directors have pledged to vote in favour of the deal and represent approximately 9.2% of the Instem’s outstanding shares.

David Gare, chairman of Instem said the current strategy is anticipated to generate ‘substantial’ long-term value but also cautioned that the next stage of development for the company is at an early stage and there is ‘an element of risk attached to some of our recent initiatives, which will take time to deliver value’.

Gare commented: ‘The offer from Bidco represents an attractive valuation and offers shareholders the certainty of cash today, while also fairly reflecting the exceptional quality of the Instem business, its people and its future prospects.

‘Under Bidco's private ownership, without the costs and regulation of a listed company, Instem will be able to pursue its organic growth strategy, while benefiting from the expertise and capital to accelerate its successful acquisitive growth plan.’

WHO IS ARCHIMED?

Archimed is a leading global investment firm that is exclusively focused on health care with more than $8 billion of assets under management. Over the last 20 years the management team have directly managed and invested in over eighty small to large size healthcare companies globally, representing over $30 billion of combined value.

It specialises in providing companies with the strategic, operational and financial resources required to facilitate the companies' efforts in innovation, internationalisation, capacity increase, product range expansion and acquisitions.

PRIVATE EQUITY DOUBLES DOWN IN HEALTHCARE

Instem isn’t alone in accepting the warm embrace of private equity. Teleradiology specialist Medica was taken private in a £269 million deal in April 2023.

Despite a wider slowdown in mergers and acquisitions, the number of private equity deals in health care hit their highest since 2014 over the past two years according to consultancy LaingBuisson.

‘The pandemic has demonstrated the value of investing in healthcare services as it showed the resilience of operators which are underpinned by public funding’ commented managing director of research Tim Read.

While services from the private sector have expanded and helped address the huge backlog of NHS patient waiting lists there are concerns over its effectiveness. A recent research paper published in the British Medical Journal found that healthcare provided by private equity-backed companies was often more expensive and had ‘mixed to harmful impacts on quality’.

LEARN MORE ABOUT INSTEM

 

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