Synexus agrees to private sale
(€25.7m) sale of the company to a private equity firm that has
promised to fund its global expansion ventures.
Ironically, the UK-based firm first went public on the Alternative Investments Market (AIM) in late 2005 in order to generate cash for its buy-and-build strategy, which it did, snapping up businesses in Hungary, Poland, Bulgaria, India and South Africa. Now, the contract research organisation (CRO) is intent upon continuing its acquisition spree, although it is no longer able to raise enough cash via the stock market to continue doing so, hence its move to return to private ownership, company CEO Michael Fort told Outsourcing-Pharma.com. "By public company standards we are small, there are not many like us in our sector listed on the stock exchange and we have seen our share price drifting south due to a general malaise in the industry," said Fort. "As a result, it has been difficult to generate the funding needed to continue making acquisitions." Indeed, in June the company, whose core activity is patient recruitment for later stage clinical trials, recorded an 8 per cent increase in sales to £10.3m for the year ended 31 March 2007, compared to £9.5m in 2006. However, the firm's operating profit dived from £1.5m to £328,000 this year - a 79 per cent decrease. The main drivers for this decline were higher operating costs which reached £10m this year, a 25 per cent jump from the previous year, which the company saw as a reflection of the increased capacity in business and the cost of acquisitions. The company also pinpointed an "unusually large number of contracts whose start dates had been delayed by clients", as a major cause for its woes. The potential new buyer is London firm Lyceum Capital, which plans to use a newly-created entity called Sigma Acquisitions as the buyout vehicle. According to Fort, any sale of the business would not impact the daily functioning of the firm - it will effectively be business as usual. However, the new owner will provide the funds Synexus needs to continue its acquisitive strategy, without the firm having to worry about a falling share price, he said. "Lyceum conducted research into the sector and decided that it is fragmented and presents a good opportunity for investment," said Fort. Should the sale go ahead, geographic areas the firm will be eyeing over the next 18-24 months include the US and central and Eastern Europe, he added. The sale offer is now being considered by company shareholders and will be voted on at a meeting scheduled for 26 November. Should the sale receive enough positive votes, the deal will close on that day.
