Abcam Founder Writes Letter Expressing Dissatisfaction with Danaher Acquisition; Campaign Unlikely to Succeed
Dr. Jonathan Milner, the founder and a major investor in Abcam plc, has initiated a “Vote AGAINST” campaign and issued an open letter to the company’s shareholders on Sep. 28, 2023. This campaign aims to express dissatisfaction with the proposed acquisition of Abcam by Danaher Corporation and concerns regarding Abcam’s governance, execution, and cost control.
In his letter, Dr. Milner outlines his concerns about Abcam’s performance following his departure from the board in October 2020. He cites issues such as inadequate governance, lackluster investor relations, deficient cost controls, and what he views as subpar execution. Dr. Milner also expresses frustration with the restrictions placed on his attempt to rejoin the board, which he believed would limit his ability to contribute effectively.
Dr. Milner highlights a series of events leading up to the “Vote AGAINST” campaign:
1. Review of Strategic Alternatives: In June 2023, Abcam’s board announced a review of strategic alternatives, including the potential sale of the company. Dr. Milner supported this move but expressed concerns about the outcome.
2. Low Acquisition Offer: On August 28th, 2023, Abcam disclosed an offer from Danaher Corporation to acquire the company at $24 per share, which Dr. Milner considers inadequate and believes undervalues Abcam.
3. Reshaping the Company: Dr. Milner outlines his plans for the company, including reshaping the board, removing the current CEO, CFO, and Chairman, and appointing highly qualified and independent nominees. He proposes assuming the role of full-time CEO and implementing a strategy focused on core leadership in antibodies, improving margins, boosting free cash flow, and resuming dividend payments.
4. Dual Listing: Dr. Milner suggests maintaining Abcam’s listing on NASDAQ and listing the company on the Main Market of the London Stock Exchange to cater to UK institutions and take advantage of regulatory reforms.
Dr. Milner encourages all shareholders to vote against the proposed transaction on the proxy form to send a clear message to the board about their dissatisfaction with the acquisition and concerns about governance, execution, and cost control. The “Vote AGAINST” campaign is part of Dr. Milner’s efforts to address what he sees as critical issues within Abcam and advocate for changes to benefit shareholders and the company’s future direction.
On a September 14, 2023, the board of Abcam issued a statement relating to Dr. Milner’s opposition to the proposed acquisition. Abcam highlights that the acquisition by Danaher received unanimous approval and recommendation from the Abcam Board of Directors after a thorough, competitive sales process that engaged 30 counterparties and 20 potential strategic acquirers. Danaher’s all-cash offer of $24.00 per share was considered the highest and best price among multiple offers received. The company believes that the recommended all-cash offer provides value maximization and certainty for shareholders, as well as positive outcomes for employees and customers. Abcam is expected to continue operating as a standalone entity within Danaher’s Life Sciences segment, maintaining its UK headquarters, and contributing to Danaher’s presence in the UK.
The $5.7 billion take-out which was announced August 28, 2023 represents a multiple of TTM revenue of 11.6x and a multiple of TTM EBITDA of 42x. Given valuation contractions for many life science tools peer companies, it seems hard to believe that shareholders will vote against the transaction given the attractive nature of these valuation multiples. However, the current spread on the transaction of 6% has widened modestly in the last few weeks. Danaher as a major global player in life science tools in diagnostics is a natural strategic acquirer of Abcam given their ability to leverage their distribution footprint, expense structure, and potentially garner sales synergies.