Alliance Pharma Faces Delisting as DBay Advisors Closes in with £362 Million Takeover Offer

The activist investor DBay Advisors is set to take Alliance Pharma private with a final, sweetened offer of £362 million. The Isle of Man-based investment firm has increased its cash offer to 64.75p per share, up from a previous bid of 62.5p in January. This revised proposal has received the backing of Alliance’s board, along with support from Slater Investments, the company’s second-largest shareholder with a 13.5% stake.

The shareholder vote on the deal will take place on Thursday, and analysts anticipate the transaction will proceed given the strong backing and compelling premium on offer. DBay already controls 27.9% of Alliance Pharma’s shares, making its latest approach the sixth attempt to acquire the company. The final offer represents a 46% premium to the closing share price before DBay’s offer in January, though it remains 46% below the April 2022 trading price.

Alliance Pharma, headquartered in Chippenham, Wiltshire, has struggled in recent years, facing challenges ranging from declining sales in its US division—where menopause product Amberen has lost market share—to pandemic-related disruptions in China that impacted sales of its popular Kelo-Cote scar treatment. Despite overcoming an investigation by the Competition and Markets Authority in 2022, the company has not managed to regain its financial footing.

There has been increased scrutiny over the long-term future of AIM, London’s junior stock market, where Alliance Pharma is currently listed. The market, which peaked with nearly 1,700 listed companies in 2007, has seen numbers dwindle to just 688 as of late 2023. The likely delisting of Alliance follows a broader trend of companies departing AIM amidst discussions over its declining significance in the investment landscape.

DBay Advisors appears well-positioned to take Alliance private and provide the company with funding to accelerate its growth strategy. Despite the turmoil, DBay has pledged support for Alliance’s leadership team and focused on addressing challenges through enhanced investment and liquidity outside the constraints of public markets. The investor has also retained a “rollover” option in its offer, allowing existing shareholders to retain a stake in the company after it is taken private.

Market observers are confident in the deal’s completion, noting that Alliance has attracted interest from larger stakeholders, including Artemis Investments, Sand Grove Capital Management, and the Bill and Melinda Gates Foundation Trust. Analysts at Stifel have remarked on DBay’s “take-private history” and the company’s consistent accumulation of shares, interpreting these moves as strong indicators of both intent and commitment.

As Alliance Pharma transitions away from public ownership, industry experts are casting a critical eye on AIM’s current role in nurturing high-growth potential companies amid intense market headwinds. Alliance’s potential delisting may represent yet another case study in the broader challenges facing London’s junior market.