Evotec: Upgraded On Healthy Cash Flows Post Acquisition
Edison | Mar 07, 2017 03:44AM ET
Evotec AG O.N. (DE:EVTG) ended 2016 with the landmark deal with Celgene (NASDAQ:CELG) for Evotec’s induced pluripotent stem cell (iPSC) platform, bringing in a $45m upfront payment. Other recent highlights were Novo A/S’ €90.3m investment in the company and the acquisition of Cyprotex, an ADME-Tox and DMPK specialist that will enhance Evotec’s core service offering and also add new clients. Evotec’s Q316 results were solid, with better-than-expected margins being the main surprise for us, which prompted us to upgrade our forecasts and raise our valuation to €1.2bn.
All-cash acquisition of Cyprotex
Following shareholder approval, Evotec finalised the acquisition of Cyprotex in December 2016 with a total cash outlay of £55.7m (shares and repayment of debt). The offer price of £1.60 per Cyprotex share implied a 9.4% premium to the volume weighted average price of the 30 trading days on AIM prior to the offer, and an undemanding price to sales ratio of 2.4x (based on Cyprotex’s H116 sales), compared to Evotec’s price to sales ratio of 4.1x (using our FY16 sales estimate) at the time of the announcement.
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