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Independent Horizon deals small blow to Woodford & Barnett

Shares in Horizon Discovery, a life sciences company backed by fund managers Neil Woodford and Mark Barnett, sold off after Abcam withdrew bid offer.

 
Independent Horizon deals small blow to Woodford & Barnett
 

Shares in Horizon Discovery (HZDH), the gene editing specialist backed by Neil Woodford and Mark Barnett, fell 10% this week after life sciences company Abcam withdrew its takeover bid for the business.

Abcam (ABCA), which like Horizon Discovery is based in Cambridge, has withdrawn its offer to buy the business in a deal that would have valued Horizon Discovery at 181p per share.

Abcam said it had decided to walk away from the deal in light of Horizon Discovery’s annual results, covering the 12 months to the end of December 2017. This saw the company announce a 52% increase in group revenue to £36.5 million.

Horizon confirmed that the acquisition of Dharmacon from General Electric last year had boosted revenue and provided global cross-selling opportunities.

Last week, Horizon Discovery rebutted Abcam’s offer, claiming there was little ‘strategic rationale’ to combine the two companies.

After the announcement on Wednesday, shares in AIM-listed Horizon Discovery plunged 20% from 190p to 151p – and have now settled around 170p. Prior to the takeover offer, Horizon’s share price had been 144p.

Horizon Discovery currently accounts for 0.68% of the Woodford Equity Income fund and sits in the Perpetual Income and Growth (PLI ) investment trust, run by Barnett - Woodford’s predecessor at Invesco. An Abcam-Horizon Discovery deal would have provided a welcome boost to the portfolios managed by Woodford and Barnett, following a raft of mishaps over the past year.

These include Capita (CPI), which saw its shares plunge 40% in late January after it announced a rights issue and the suspension of its dividend due to a profit warning. The company completed a £700 million emergency rights issue on Thursday.

Sub-prime lender Provident Financial’s (PFG) share price tanked 70% last year after profits warnings and a big fine and probe by the City regulator. The shares have been flat this year but rose this week on a first half trading statement in which the group said its recovery plans were on track and 2018 results would be in line with its  expectations.

According to Reuters’ data, Woodford Investment Management and Invesco represent the two largest shareholders, followed by Hargreave Hale. Other fund groups with stakes include Baillie Gifford, Aviva Investors and Majedie Asset Management.

3 comments so far. Why not have your say?

Mik

May 11, 2018 at 16:33

The price of Horizon Discovery is up 18% from 144 to 170 since just before the bid. The bid was 181 and the price rose to 190 on the back of it, clearly indicating that the market thought it was too low. Abcam walked away because HD's revenue is up 52%, making them also realise their offer was too low. But that's all deemed to be bad news for Woodford and Barnett. What do they have to do to get good press?

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Novgorod

May 11, 2018 at 18:33

I think it is a shame Abcam didn't buy Horizon. They have similar client bases & the former is very profitable and cash generative and would have helped the latter develop a lot quicker.

I suspect a foreign company will buy Horizon now as they've effectively been put into play.

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bouleversee

May 11, 2018 at 20:28

It was an opportunistic bid at a very low price (sp had been much higher prior to unexplained hasty departure of CEO). FWIW Numis is recommending HZD as a buy with a target price of 245p.

Having said that, an increase in revenue is good but a bit of profit would be better.

Incidentally, doesn't Woodford's Patient Capital Trust have a holding in HZD? It would seem a more appropriate home.

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