Directors at international healthcare group Alliance Pharma have accepted a £350m takeover offer from its biggest shareholder in a move they says will offer relief from a tough few years.
The Chippenham-headquartered firm, which owns a portfolio of products ranging from eye care treatments to anti-dandruff shampoo, has transformed itself over the past five years from a business focused on prescription medicines to a fast-growth consumer healthcare company.
Among its top-selling brands are scar prevention and treatment Kelo-Cote, eye care product MacuShield, Amberen, a relief for menopause symptoms it acquired in 2020, and Nizoral, an anti-dandruff medical shampoo brand it bought in 2018.
But it has also been rocked by a series of problems, including leadership changes and delays in publishing its 2023 full-year financial results, which triggered a sharp in its share price.
Today directors at the firm, which employs around 285 people across Europe, North America and the Asia-Pacific region, recommended the approach by Isle of Man-based DBAY Advisors, which already owns a 27.9% stake in Alliance.
DBAY, formerly Douglas Bay Capital Investments, has built up a portfolio of business since it was launched in 2008, including baked food group Finsbury, which it acquired in October 2023.
Its other acquisitions and investments over the past few years have also been in IT and software businesses.
DBAY said it had “followed Alliance's story” for several years and began acquiring Alliance shares just over two years ago. It first approach the firm last May.
It said it supported Alliance's leadership team and believes in the firm's future prospects but considered it needed to “implement a range of operational and strategic initiatives, in conjunction with a period of accelerated investment and selective acquisitions of complementary products, in order to fulfil the growth potential of the business”.
It also said it had become apparent that Alliance, which has been listed on the London Stock Exchange’s AIM market for nearly 20 years, “needed time away from the public market to allow it to fully deliver these initiatives in a reasonable timeframe”.
It added that it believed Alliance's public quotation, “with its associated reporting requirements, material costs and potential for management distraction”, was negatively impacting Alliance's ability to prioritise long-term growth.
As a result, it did not currently offer significant benefits for the business.
Alliance chief executive officer Nick Sedgwick, pictured, who joined in May last year from UK hygiene, health and nutrition brands group Reckitt, has been heading its turnaround plan but said the cost of the plan was a major reason for the takeover.
“The Alliance directors recognise that delivering the new strategic plan will take significant time and investment to deliver its potential benefits,” the firm said.
“Furthermore, a number of uncertainties exist around plan delivery, some of which are beyond Alliance’s control.”
Alliance non-executive chairman Camillo Pane, who joined the business 11 months ago, said: “Since IPO [initial public offering] Alliance has grown to become a globally diversified player in the consumer healthcare market.
“Alliance now has several leading brands across its priority categories and a global operating platform.
“Led by our CEO Nick Sedgwick, management is developing a plan to return to consistent, profitable growth in our target markets.
»Whilst the board has confidence in Alliance's strategy and team, many of the planned initiatives are at a relatively early stage, retain an element of execution risk and will take time to deliver value. The Board of Alliance believes that the offer from DBAY represents an attractive and certain value in cash today for our shareholders.”
He described DBAY as an experienced investor with a proven track record in supporting management teams to achieve their growth ambitions.
“Ownership of Alliance by DBAY will provide access to DBAY's operational expertise and significant additional capital to accelerate its strategy to grow through increased investment in new product innovation and development, M&A and expansion into new markets," he added.
Alliance said the all-cash offer from DBAY represented a premium of approximately 40.9% on its shares’ closing price of 44.4p last night and 112.9% on the 29.4p price on 8 May last year, the day before DBAY's initial approach to the Alliance board.
