Headwaters Capital Calls Out Fishy Bid for Abcam from Danaher in Letter to Stakeholders – Exclusive - CorpGov
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Headwaters Capital Calls Out Fishy Bid for Abcam from Danaher in Letter to Stakeholders – Exclusive
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Headwaters Capital Calls Out Fishy Bid for Abcam from Danaher in Letter to Stakeholders – Exclusive

  • Medical specialist company Abcam plc (Nasdaq: ABCM) agreed to $24 a share deal with Danaher on activist pressure
  • Headwaters Capital Management, LLC points out that Danaher issued lower forecasts than Abcam in deal announcement
  • Headwaters Capital believes that the fair value of ABCM’s shares is between $35-$39 per share
  • Shareholders likely won’t know 2023 results before meeting to vote on Danaher deal
  • Headwaters points out transaction ensures management receives payment regardless of 2024 performance
  • Activists include Headwaters Capital, Starboard Value among others
  • Cambridge scientist and Abcam co-founder Jonathan Milner has also voiced opposition to deal
  • Abcam has called opposition to transaction “surprising” and didn’t reply to a request for comment
  • Abcam says it will file disclosure following High Court of Justice in England and Wales
  • Abcam has enlisted American PR outfit Joele Frank to defend the transaction

By John Jannarone and Daniella Parra

Medical supplies behemoth Danaher Corp. is buying Abcam plc for far less than it’s worth, based on the latter’s own recent financial forecasts and a longer-term plan, according to a letter to stakeholders from shareholder Headwaters Capital LLC seen exclusively by CorpGov.

Britain-based Abcam plc, which provides highly-specialized research antibodies, agreed to a sale to Danaher after a strategic review involving many interested parties. They agreed on a price of $24 a share, or nearly $6 billion. The full letter is available here.

The trouble, according to the stakeholder letter from Headwaters, is that Abcam just a few months ago issued financial forecasts that don’t line up with Danaher’s.

At the core of the issue is a forecast made previously by Abcam, which denotes a midpoint of 44% Ebitda margin. Using the same multiple put forth by Danaher in the deal announcement, a fair value for Abcam is $37 a share.

Moreover, Headwaters Capital believes there is an opportunity for even greater margin improvement beyond 2024. Abcam’s margins combined with DHR’s projection for significant cost synergies imply that Abcam’s 2024 targets are easily achievable, Headwaters says in the letter.

One of the company’s co-founders, Cambridge scientist Jonathan Milner, has also voiced opposition to the deal. Milner, who served Abcam as CEO from 1999 to 2014 and later as deputy chairman from 2015 to 2020, said the offer “falls significantly short” of Abcam’s inherent worth.

Neither Danaher, Abcam, Starboard nor Headwaters responded immediately to requests for comment form CorpGov. Milner couldn’t be reached for comment.

Abcam has hired American PR outfit Joele Frank, known for knife-fight tactics, to defend the deal. The situation is somewhat reminiscent of a past deal defended by Joele Frank involving mixed messages to shareholders. After a prolonged battle, Starboard swept the board of Darden in a stunning victory after the company apparently conveyed different pictures of Red Lobster’s financial health to different sets of investors.





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