Revised UK pharma bid lets hedge funds keep shirts

LONDON, Jan 17 (Reuters Breakingviews) - A sweetened 1.3 billion pound offer for Clinigen (CLINC.L) has got hedge funds like Elliott Management out of a tight spot. The U.S. activist investor piled into the UK pharmaceutical company hoping for a counterbid to an 883 pence-per-share tilt bid from British buyout firm Triton in December. That pushed Clinigen shares as high as 942 pence, their strongest since before the pandemic.

Frustratingly for Elliott, which now owns more than 10%, alternative buyers have been hard to find.

That’s not surprising. Triton’s first bid implied a measly 14% internal rate of return, according to Breakingviews calculations based on 6% annual revenue growth, stable margins, leverage at 6 times EBITDA and an exit in 2027 at a similar multiple. Rejecting the offer risked Clinigen shares plunging 40% or more. With Triton upping its bid to 925 pence, in line with where many hedge funds bought in, speculators can at least exit with their clothing intact. (By Ed Cropley and Aimee Donnellan)

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