NOTV Stock: Why It Significantly Increased Today

By Noah Long ● Sep 21, 2021
  • The stock price of Inotiv Inc (NASDAQ: NOTV) significantly increased today. This is why it happened.

The stock price of Inotiv Inc (NASDAQ: NOTV) – a leading contract research organization (CRO) specializing in nonclinical and analytical drug discovery and development services – significantly increased today. Investors are responding positively to Inotiv and Envigo RMS Holding (a leading global provider of research models and services) jointly announcing that they have entered into an agreement for Inotiv to buy Envigo. And upon consummation of the acquisition, which is subject to customary closing conditions, the combined company will enable drug developers to access products and services for the entirety of discovery and nonclinical development within one organization.

The deal consideration consists of $200 million of cash and 9,365,173 Inotiv common shares, subject to certain adjustments at closing. And Inotiv has received committed debt financing to fund the cash portion of the transaction. And based upon the closing price of Inotiv common stock on Monday, September 20, 2021, the transaction values Envigo at an enterprise value of approximately $545 million and the combined company at an enterprise value of approximately $1.2 billion.

Upon the closing of the deal, Inotiv shareholders are expected to own approximately 64% and Envigo shareholders are expected to own approximately 36% of the combined company on a fully diluted basis.

The expected benefits of the merger include the following:

— Create a unique full-spectrum provider of drug discovery and non-clinical development services along with a leading research model products platform

— Expand combined customer base to about 3,000 customers across pharma, biotech, and academia with significant opportunity for cross-selling

— Strengthen Inotiv’s operational presence in North America and add several locations in Western Europe to bolster the combined company’s global service delivery

— Enhance scale with unaudited pro forma combined revenue of $286 million during the nine months ended June 30, 2021

— Maintains financial momentum for both companies. Inotiv’s revenue grew 33% to $60 million for the nine months ended June 30, 2021, from $45 million during the same period in 2020. Envigo’s revenue grew 22% to $141 million during the six months ended June 30, 2021, from $115 million during the six months ended June 30, 2020.

— Create shareholder value with expected immediate earnings and margin accretion (prior to potential synergies)

— Delivers potential cost and revenue synergies through SG&A cost savings and cross-selling existing clients across a broader platform of services and products

More Transaction Details

— The transaction values Envigo at an enterprise value of approximately $545 million. For the nine months ended June 30, 2021, Envigo generated unaudited pro forma revenue of approximately $212 million.

— Transaction consideration consists of $200 million of cash and 9,365,173 Inotiv common shares, subject to certain adjustments at closing. Inotiv has received committed debt financing to fund the cash portion of the transaction.

— The combined company, under the leadership of Robert Leasure, Jr. as President and CEO, expects to retain existing executive-level leadership and staff after transaction close.

— The transaction is expected to close in the fourth calendar quarter of 2021 subject to, among other things, required regulatory approval, certain approvals by the Inotiv shareholders to permit the issuance of the common shares in connection with the transaction, approval of the merger agreement, and merger by Envigo stockholders and other customary closing conditions.

KEY QUOTES:

“Evolving complexity in the disease research space is creating additional demand for research models, and continued innovation in biopharma is increasing demand for specialty and disease-specific models. The complementary nature of Inotiv and Envigo is expected to accelerate the movement of innovative drugs and medical devices through the discovery and preclinical phases of development. Supported by deep, in-house expertise and scientific capabilities, we’re building a comprehensive contract pharmaceutical research solutions provider with a full spectrum of discovery and nonclinical services and research models into a unique, one-stop-shop, discovery-to-approval solution for drug developers.”

— Inotiv President and CEO, Robert Leasure, Jr.

“Envigo has a long history and broad expertise supplying critical research models and services to the scientific community. Our diverse client base of CROs, pharmaceutical, government and academic institutions and Inotiv’s biopharma clients will be able to utilize leading research models and services from Envigo, including genetically engineered models and services (GEMS), contract breeding services, Teklad laboratory animal diets, surgical services, custom antibody services, and large and small research models.”

— Envigo CEO Adrian Hardy

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.