Horizon Discovery acquires US world leader for $85m

horizon discovery, gene-editing, cambridge

Cambridge gene editing world leader Horizon Discovery had UK stockmarket anoraks scouting the record books after announcing the agreed $85 million acquisition of Colorado-based General Electric company GE Healthcare Dharmacon, Inc.

AIM-quoted Horizon is funding the deal from a stunning $104.16m (£80m) placing of 39,024,390 new ordinary shares at 205p per share. The consideration includes $50m in cash and $35m in equity.

The deal wraps round some impressive financial return metrics with an expected ROIC of 10 per cent by 2020.

Integration plans are in place to achieve revenue and cost synergies within 12 months by optimising the best of the pooled talent, eliminating duplicate costs, reducing R & D outlay through shared scale, and exploiting cross-selling opportunities for combined business across an enlarged global customer base.

Dharmacon is a global leader in RNAi products with a fast growing gene editing product portfolio especially in CRISPR reagents and arrayed libraries. The acquisition will create immediate market access for Horizon’s next generation research product and service offerings through a robust eCommerce platform and established global distribution channels, especially in Asia-Pacific.

Dharmacon delivered revenues of $36.7m in the year ended December 31 and EBITDA of $5.4m.

The combination will create a leading global player in the application of gene-editing and gene modulation in life science research and further underpins Horizon’s cell builders model where gene editing and modulation platforms are used to design, engineer and apply cells for the advancement of human healthcare.

Darrin Disley, CEO of Horizon said: “Through the combination of complementary technology, product portfolios and manufacturing capabilities, the acquisition of Dharmacon by Horizon creates an emerging leader in the application of gene modulation technologies in life science research.

“We expect that the brand recognition, and sales, marketing (including eCommerce) and distribution channel particularly in the academic community as well as intimate relationships in biotech and pharma that Dharmacon will bring to Horizon, will transform the opportunity for Horizon’s product portfolio as well as generate attractive cost-base synergies.”

Kieran Murphy, president and CEO of GE Healthcare added: “We are pleased to reach an agreement that combines the strong Dharmacon brand and technologies with the industry leading gene editing technologies, products and services of Horizon.

“We believe that the combination creates a global leader in gene modulation and are excited to retain a meaningful stake in the combination.”

The total cash raise of $104m and $35m stock issue to help fund the acquisition take the deal value to $139m. I understand $54m of the new cash raised will be used for working capital to fund further scale-up of the business with a positive and massive impact to the bottom line.

The markets weren’t open when the news broke but the deal poses the question of whether the £68.6m Horizon raised on IPO in 2015 added to the £120m secondary raise (£188.6m total)  is a cumulative fundraising record for a biotech company in the Cambridge science & technology cluster – or indeed on AIM itself.

The record books were also being scoured to see whether Horizon’s £80m raise here is the biggest secondary placement on AIM in the past two years.

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