Advanced Accelerator Applications acquired by Novartis: fairness opinion by Jefferies
Deal terms
Implied value per share by method vs. $82.00 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Jefferies to the target board
Discounted cash flow assumptions
Present value as of January 1, 2018 of unlevered free cash flows through calendar year 2030; terminal value based on perpetuity growth rates applied to 2030 estimated free cash flow; net cash added as of September 30, 2017 using FX rate of 1.1693 USD/EUR.
Selected public companies (9)
Agios Pharmaceuticals, Inc. · Array BioPharma, Inc. · Atara Biotherapeutics, Inc. · Clovis Oncology, Inc. · Exelixis, Inc. · ImmunoGen, Inc. · Puma Biotechnology, Inc. · Seattle Genetics, Inc. · Tesaro, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / 2018E Revenue | 6.0x | 13.6x | 15.6x | 13.0x–14.0x | $75.48–$80.78 |
| EV / 2019E Revenue | 2.5x | 7.7x | 10.9x | 7.0x–8.0x | $80.15–$90.67 |
Selected precedent transactions (10)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2016-08 | Medivation, Inc. | Pfizer Inc. | — |
| 2015-03 | Hyperion Therapeutics, Inc. | Horizon Pharma plc | — |
| 2015-01 | NPS Pharmaceuticals, Inc. | Shire Pharmaceutical Holdings Ireland Limited; Shire plc | — |
| 2014-12 | Cubist Pharmaceuticals, Inc. | Merck & Co., Inc. | — |
| 2013-11 | ViroPharma Incorporated | Shire Pharmaceutical Holdings Ireland Limited; Shire plc | — |
| 2013-08 | Onyx Pharmaceuticals, Inc. | Amgen Inc. | — |
| 2012-06 | Amylin Pharmaceuticals, Inc. | Bristol-Myers Squibb Company | — |
| 2012-04 | Human Genome Sciences, Inc. | GlaxoSmithKline plc | — |
| 2010-06 | Abraxis BioScience, Inc. | Celgene Corporation | — |
| 2010-03 | OSI Pharmaceuticals, Inc. | Astellas Pharma Inc. | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| Transaction Value / LTM Revenue | 6.4x | 9.5x | 18.7x | 8.5x–10.5x | $36.27–$43.29 |
| Transaction Value / CY+1 Revenue | 6.6x | 8.6x | 15.5x | 8.0x–9.0x | $48.95–$54.26 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Premiums Paid Analysis (Other Factors, informational) | Reviewed premiums paid in 18 selected biopharmaceutical transactions announced May 2014-August 2017 with transaction values over $2.0 billion and cash consideration of 75% or greater. 1-day premiums: high 238.9%, 75th percentile 72.7%, median 46.2%, mean 63.1%, 25th percentile 35.9%, low 23.5%. Applied 25th-75th percentile 1-day premiums (35.9%-72.7%) to the $59.76 September 27, 2017 closing price per ADS. | $81.22–$103.23 |
| Transaction Overview / Implied Premiums | Offer Price of $82.00 per ADS implied premiums of 18.9% over the October 26, 2017 close; 37.2% over the $59.76 September 27, 2017 close; 65.8% over the 30-trading-day prior close; 123.3% over the 90-trading-day prior close; 41.3%/46.9%/65.6% over 10/30/90-day VWAPs; 32.0% over the 52-week high of $62.13; and 248.9% over the 52-week low of $23.50. | — |
Transaction fee of approximately $19 million based on a percentage of transaction value; $2 million paid upon delivery of the opinion and creditable against the transaction fee, remainder contingent on consummation of the Offer. No portion of opinion fee contingent on conclusion. Jefferies received ~$5 million in financing fees from the Company in the prior two years and no fees from Parent.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | $436M | $635M | $858M | $1.0B | $1.2B | 29.6% |
| Revenue growth | 98.2% | 45.6% | 35.1% | 20.7% | 18.7% | |
| EBITDA | $146M | $345M | $541M | $703M | $884M | 56.9% |
| EBITDA growth | — | 136.3% | 56.8% | 29.9% | 25.7% | |
| EBITDA margin | 33% | 54% | 63% | 68% | 72% | |
| Implied EV / EBITDA | 26.7x | 11.3x | 7.2x | 5.5x | 4.4x |
Year-1 growth is against LTM at announcement ($220M revenue, $-6.0M EBITDA); later years are year over year.
Jefferies used probability-weighted financial forecasts and analyses prepared by Company management covering calendar years through 2030, including probability-weighted revenue estimates for CY2017, CY2018 and CY2019 used in the selected companies and selected transactions analyses and unlevered free cash flows through CY2030 for the DCF. Specific revenue and EBITDA dollar figures were not disclosed in the sliced sections. Net cash of approximately $210 million as of September 30, 2017 was provided by management.
Process notes
Other Diagnostics / Life Sciences fairness opinions
- Alere / Abbott Laboratories 2017 · 14.3x EV/EBITDA
- VWR / Avantor 2017 · 12.6x EV/EBITDA
- Abaxis / Zoetis 2018 · 41.3x EV/EBITDA
- FEI / Thermo Fisher Scientific 2016 · 15.1x EV/EBITDA
- Sequenom / Laboratory Corporation of America 2016
- Genomic Health / Exact Sciences 2019 · 32.2x EV/EBITDA
All Diagnostics / Life Sciences opinions → · Jefferies opinions