PerkinElmer said today it agreed to acquire Horizon Discovery Group for approximately $383 million, in a deal intended to add gene editing and gene modulation tools to the buyer’s portfolio of automated life sciences discovery and applied genomics solutions.
PerkinElmer said the acquisition will enable it to better partner with academic and biopharma industry scientists by providing tools for exploring next-generation cell engineering and customized cell lines for biological models, thus advancing precision medicine.
Those offerings of Horizon would be combined with PerkinElmer’s discovery and applied genomics solutions, which include a range of immunoassay platforms, high content screening (HCS) and in vivo imaging, along with microfluidics, robotic liquid handling technologies and next-generation sequencing library preparation kits.
PerkinElmer’s life sciences solutions span across early-stage research, drug discovery, drug development and QA/QC for drug manufacturing. The acquisition would combine complementary offerings of PerkinElmer and Horizon across genotypic and phenotypic approaches for drug discovery and development—which PerkinElmer reasons will help researchers accelerate decision making with better information, automated workflows and greater quality and control over data.
“We’re excited to team up with Horizon to not only add CRISPR and RNAi capabilities into our existing portfolio, but also to leverage our combined life sciences screening and applied genomics solutions to help propel the next phase of cell and gene research for precision medicine,” PerkinElmer president and CEO Prahlad Singh said in a statement. “PerkinElmer leads with science and creates total solutions to bring today’s leading innovations together for our customers, while also working at the cutting edge of what’s next. Today’s announcement delivers on both of these fronts.”
Horizon shares double
At $385 million, the deal values Horizon shares at 185 pence ($2.39)—more than double its Friday closing price of 88.8 pence ($1.15), and a 95% premium to the stock’s three-month weighted average price. As a result, Horizon investors responded to the acquisition announcement by sending shares up 111%, to 187.50 pence ($2.42) before dipping to 186.50 pence ($2.41) as of 10:06 a.m. ET.
Shares of PerkinElmer rose 2.43% or $3.15 from Friday’s close of $129.55 in early trading today, to $132.70 as of 10:06 a.m. ET.
“The Acquisition represents a compelling opportunity for Horizon Shareholders to realise the full value of their investment in cash at a substantial upfront premium to the prevailing share price of the Horizon Shares,” Horizon said in a statement filed with the London Stock Exchange, where its shares are traded.
As of the filing of the statement earlier today, PerkinElmer had received the support of 21% of Horizon shareholders.
Headquartered in Cambridge, U.K., Horizon is a provider of CRISPR and RNAi reagents, cell models, cell engineering and base editing offerings which help scientists better understand gene function, genetic disease drivers and biotherapeutics delivery.
On the CRISPR front, most recently in June, Horizon announced the introduction of its stably expressing Cas9 and dCas9-VPR cell lines to help accelerate gene knockout and gene activation experiments, respectively. The cell lines are optimized to work alongside Horizon’s Edit-R predesigned synthetic single guide RNA (sgRNA) and CRISPRa guide RNA, with the aim of offering researchers a complete solution to simplify and streamline CRISPR gene editing and modulation workflows.
Horizon has approximately 400 employees across multiple countries—including the U.K., the U.S., and Japan. Horizon reported £58.3 million ($75.5 million) in revenue from continuing operations last year—up 11.8% from 2018, and about one-fifth the $361.973 million in operating income from continuing operations reported by PerkinElmer in 2019.
Continuing operations represented nearly 13% of overall revenue for PerkinElmer, which reported nearly $2.9 billion in total 2019 revenue, up 3.8% from 2018, and is listed on the S&P 500 stock market index. PerkinElmer employs approximately 13,000 employees and serves customers in 190 countries.
Drop in revenues
During the first half of 2020, however, Horizon’s revenue fell about 14%, to £22.4 million ($28.9 million) from £26.1 million ($33.7 million)—a decline the company blamed largely on the impact of the COVID-19 pandemic, and a resulting rapid reduction of academic research work in the second quarter.
Horizon’s loss from continuing operations stood at £9.4 million ($12.1 million) for January-June 2020, nearly double the £4.8 million ($6.2 million) loss reported a year earlier.
During the second quarter, PerkinElmer saw its net income jump 63.5% year over year, to $170.8 million on revenues that climbed nearly 7%, to $1.464 billion from $1.371 billion. Operating income from continuing operations grew 52%, to $220.3 million from about $145.1 million.
PerkinElmer’s cash and cash equivalents stood at $218.536 million as of July 5, up about 14% from $191.877 million
As of June 30, Horizon reported cash and cash equivalents of £23.6 million (about $30.5 million)—down about 5% from £24.8 million ($32 million) as of June 30, 2019, but nearly 26% above the £18.8 million ($24.3 million) reported for all of last year, when it sold its tools and services to more than 2,000 unique customers in over 60 countries, including 19 of the largest 20 biopharma companies by revenue.
Horizon credited a placement of £6.9 million ($8.9 million) in gross proceeds and cash control measures, both implemented in April, with bolstering its finances.
PerkinElmer said it expected the acquisition of Horizon to “modestly” add to non-GAAP earnings in the first year following the close. The company did not quantify how much, but did say it forecasted Horizon’s business to be attractively positioned in markets that are projected to grow at a compound annual growth rate of high-single digits over the next “few” years.
The acquisition deal is expected to close in the first quarter of 2021, subject to customary closing conditions.