Alliance Pharma agrees £350m acquisition by fund manager

Alliance Pharma has agreed a £350m takeover by its largest shareholder, asset management group DBAY Advisors.

The drugmaker said its investors would receive 62.5 pence per share under the deal, a 40.9 percent premium to its closing share price on Thursday.

The proposal also more than doubles the closing price of 29.4p recorded in May 2024, when Alliance announced the departure of its chief executive and a third delay in publishing its 2023 results in five weeks.

Since then, Alliance’s new boss Nick Sedgwick has been conducting a review to update the company’s strategy and formulating a plan to drive its long-term organic growth.

Company directors said the new plan had multiple uncertainties and would require “significant time and investment” to achieve its potential benefits.

They also said DBAY’s support and private capital will allow Alliance to return to its acquisition strategy “more quickly than if it remained in the public market.”

Alliance has traditionally expanded through acquisitions financed by share placements, but has not completed any such deals in the past two years.

The AIM-listed group attributes this to high debt, operational challenges, a “restrictive funding environment” and a falling share price.

DBAY believes the cost of Alliance’s public listing hurts its ability to prioritize long-term growth and did not provide “significant benefits” to the company given its current liquidity levels.

He added that the company “needs time away from the public market” and additional sources of financing to reach its growth potential.

Camillo Pane, non-executive chairman of Alliance, said: “DBAY’s offer today represents attractive and secure cash value for our shareholders.”

He added that Alliance’s new owners will bring “operational experience and significant additional capital to accelerate its growth strategy through increased investment in innovation and new product development, mergers and acquisitions and expansion into new markets.”

Alliance Pharma Stock had jumped 37.5 percent to 61 pence just before midday following the deal announcement.

The acquisition is scheduled to be completed in the first half of 2025, depending on shareholders representing at least 75 percent voting in favor at a general meeting.

Based in Chippenham, Wiltshire, Alliance enjoyed transparent revenues of £183m last year, as well as underlying profits before unpleasant expenses of £45m.

It specializes in making products for consumer healthcare categories with few major competitors, such as eczema, scar care and eye health.

Alliance has been looking to reduce its dependence on China, where it gets about 30 percent of its sales, in favor of smaller, more regular orders.

Its proposed takeover comes amid a frenzy of foreign companies taking advantage of depressed valuations to buy London-listed companies on the cheap.

According to the London Stock Exchange Group, £145 billion worth of British companies were purchased in 2024, a 51 percent increase on the previous year.

Among those that fell into foreign hands were cybersecurity specialist Darktrace, music rights investor Hipgnosis Songs Fund, video game services provider Keywords Studios and energy infrastructure provider Smart Metering Systems.

Others to agree takeover deals included soft drinks seller Britvic, investment platform Hargreaves Lansdown and Royal Mail owner International Distribution Services.