Halozyme Therapeutics, Inc. (NASDAQ: HALO) has provided an update regarding its non-binding proposal to acquire Evotec SE (NASDAQ: EVO) for €11.00 per share in cash, valuing the transaction at approximately €2.0 billion. A presentation on Halozyme’s investor relations website outlines how this strategic combination would position the companies as a leading global pharmaceutical services provider, delivering significant benefits to stakeholders.
Key Highlights of the Proposal
Strategic Alignment with Halozyme’s Business Objectives
The acquisition aligns with Halozyme’s merger and acquisition (M&A) criteria:
- De-risked Revenue Base: Evotec boasts a diversified revenue stream with opportunities for future growth in both revenue and margins.
- Innovative Platform: Evotec’s proprietary technologies support drug discovery, development, and biologic manufacturing.
- Global Partnerships: Evotec collaborates with over 500 biopharma companies worldwide.
- Long-term Revenue Potential: Evotec’s platforms and pipeline are poised to enhance Halozyme’s future revenue opportunities.
Creation of a Comprehensive Pharma Services Leader
The combination would leverage complementary capabilities across both organizations:
- Drug Discovery: Evotec’s Shared R&D platform includes tools for innovative drug discovery, with a strong track record and more than 500 partnerships supporting over 140 assets.
- Biologic Manufacturing: Just – Evotec Biologics offers cutting-edge continuous biologics manufacturing capabilities, with 10 late-stage products and over 50 in CMC development.
- Drug Delivery: Halozyme’s ENHANZE® technology facilitates subcutaneous delivery of large-volume biologics, with approvals in eight products across 100+ global markets and an expanding pipeline.
Financial and Operational Benefits
The merger would scale and diversify Halozyme’s revenue and EBITDA growth, ensuring sustained expansion well into the next decade:
- Projected Annual Revenue: The combined entity is expected to achieve approximately $2 billion in revenue by 2025.
- Robust Growth: Maintains a projected revenue CAGR of 15-20%+ from 2023 through 2028 and beyond.
- Margin Profile: Targets an adjusted EBITDA margin of 45-50% by 2026, supported by significant cash flow generation.
Transaction Financing and Financial Health
The all-cash transaction would rely on Halozyme’s strong balance sheet and lender support:
- Cash Reserves: Halozyme anticipates cash holdings exceeding $800 million by the end of 2024.
- No Equity Financing Required: The transaction is supported by existing lenders without the need for equity financing.
- Debt Management: Net debt at close is projected at approximately $3 billion, with a net leverage ratio below 4.75x. Leverage is expected to decline to under 2x within two years post-close, supported by debt repayment and adjusted EBITDA growth.
Outlook
If completed, this acquisition would transform Halozyme into a diversified global pharma services company with a strengthened portfolio across drug discovery, biologic manufacturing, and drug delivery. The company anticipates long-term revenue growth and robust cash flow to drive further innovation and value creation for stakeholders.
