Open Orphan PLC (LON: ORPH) and Hvivo PLC (LON: HVO) have updated shareholders on Monday on the completion of a tie up deal.
Both the firms are AIM listed and the deal would value Hvivo at £13 million according to the Monday update.
Open Orphan is building a leading European rare disease and orphan drug focused pharma services company.
The firm do this in two ways: acquiring and consolidating a series of smaller, European, orphan drug services companies and deploying our digital data platforms to support companies in research & development and commercialization.
hVIVO has particular expertise in conducting human challenge studies using influenza (flu), human rhinovirus (HRV) and respiratory syncytial virus (RSV) for pharmaceutical and biotech companies.
Under the terms of the agreement, hVIVO shareholders will receive 2.47 new Open Orphan shares per hVIVO share. The deal values hVIVO shares at 15.56 pence each, a 34% premium to the clinical development services company’s closing price of 11.62p on Friday.
As the tie up deal is a reverse acquisition, Open Orphan will need to win the approval of its shareholders at their general meeting on January 6th.
Open Orphan said it expects to issue 205.5 million shares under the terms of the merger, with hVIVO shareholders owning just shy of 45% of the enlarged firm.
Open Orphan said: “Open Orphan and hVIVO are AIM-quoted groups that share a similar vision for the future of European Clinical Research Organisations and an entrepreneurial approach to developing further their business through a focus on operational efficiency, organic growth and targeted acquisitions to expand their geographic and service capabilities.
“The Open Orphan directors and the hVIVO directors believe that the combination of the businesses will result in synergies across the enlarged group with each business providing complementary services with limited overlap in existing capabilities and customers.”
Open Orphan Chief Executive Cathal Friel said: “The merger of Open Orphan and hVIVO is a key milestone in the execution of our strategy to become a larger-scale specialist pharma services business and in complementary segments where specialist skills and know-how command higher margins.
“The merger allows the combined business to maximise shareholder value through delivering cost and revenue synergies across the businesses and one that is better positioned to consistently capture greater market share as part of a properly profitable business with losses confined to the past.”
The deal will please shareholders of both firms, as this will allow the cross fertilization of specialization to become more competitive.
The pharmaceutical industry continues to become more saturated and more competitive as the big names continue to dominate headlines.
On Thursday, FTSE100 listed GlaxoSmithKline saw their shares in green after the firm said that ViiV Healthcare has completed submission of a new drug application to the US Food & Drug Administration, seeking approval of fostemsavir.
