Halozyme proposes $2 billion acquisition of Evotec

SAN DIEGO - Halozyme Therapeutics , Inc. (NASDAQ: NASDAQ:HALO) has put forth a non-binding proposal to acquire Evotec SE (NASDAQ: EVO) for €11.00 per share in cash, which would value Evotec's equity at approximately €2.0 billion. This offer represents a significant premium over Evotec's share price before the accumulation of shares by Triton Partners on October 15, 2024.

The acquisition would merge Halozyme's drug delivery technology with Evotec's drug discovery platform and biologic manufacturing capabilities. Halozyme's president and CEO, Helen Torley, expressed enthusiasm for the potential union, outlining a vision for a pan U.S./European innovative services company that could be a strategic partner to the biopharma industry, with the aim of accelerating the discovery and development of new medicines.

According to the press release, the proposed deal would leverage Halozyme's strong cash generation and balance sheet to invest in Evotec's early-stage programs and new technologies, with the expectation of scaling and extending revenue and EBITDA growth. The transaction, which is not contingent on financing, is expected to meet the requirements set by BaFin, Germany's financial supervisory authority.

Halozyme, a biopharmaceutical company known for its ENHANZE® drug delivery technology, has worked with major industry partners and has touched over 800,000 patient lives with its technology in various marketed products. The company also develops drug-device combination products, including auto-injector technologies.

The proposed acquisition is still subject to the approval of Evotec's Management Board and Supervisory Board, as well as regulatory approvals and other customary closing conditions. Centerview Partners is acting as Halozyme's financial advisor, with Weil, Gotshal & Manges LLP serving as legal advisor.

The information in this article is based on a press release statement and does not constitute an endorsement of the proposed transaction or its potential outcomes.

In other recent news, Evotec SE has disclosed its financial results for the first nine months of 2024, maintaining its full-year guidance despite challenging market conditions. The company reported stable revenue of €575.7 million, largely due to a 74% revenue increase from the Just-Evotec Biologics sector. A transformation initiative, "Reset, Review, Restart," is in progress, aiming to enhance efficiency and save €40 million. Strategic partnerships with Sandoz (SIX:SDZ) and Novo Nordisk (NYSE:NVO) have bolstered the order book for 2025.

The company's adjusted EBITDA for 2024 is projected to be between €15 million and €35 million, with total revenues expected to range from €790 million to €820 million. However, shared R&D revenue has seen a decline due to market conditions and a previous cyber-attack. Furthermore, the company is proceeding with reductions in headcount, with 200 of the planned 400 roles already eliminated.

While no new guidance for 2025 was provided, a comprehensive strategy review is set to be unveiled in the first half of 2025. This is part of Evotec's commitment to growth and profitability, with further updates on the company's performance and strategy expected in April 2024. These are some of the recent developments at Evotec SE.

InvestingPro Insights

As Halozyme Therapeutics proposes to acquire Evotec SE, it's crucial to examine Evotec's financial health and market performance. According to InvestingPro data, Evotec's market capitalization stands at $1.61 billion, slightly below Halozyme's proposed valuation of approximately €2.0 billion (about $2.14 billion at current exchange rates).

Evotec has shown strong recent market performance, with InvestingPro data indicating a 53.72% price return over the past month and a 37.46% return over the last three months. This upward trend aligns with the timing of Halozyme's acquisition proposal and suggests that the market has been reacting positively to the company's prospects.

However, it's important to note that Evotec faces some financial challenges. An InvestingPro Tip reveals that the company has not been profitable over the last twelve months, with a negative operating income of $66.97 million for the same period. This could explain Halozyme's interest in leveraging its strong cash generation to invest in Evotec's early-stage programs, as mentioned in the article.

Another relevant InvestingPro Tip indicates that Evotec operates with a moderate level of debt, which could be a factor in Halozyme's decision-making process regarding the acquisition. This moderate debt level might provide some flexibility in structuring the deal and integrating the two companies' operations.

For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips for Evotec, providing a deeper understanding of the company's financial position and market outlook. These insights could be particularly valuable in assessing the potential outcomes of the proposed acquisition.

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