Evotec’s struggles have put it in the crosshairs of private equity groups. After seeing the company’s share price fall around 60% this year, Triton Partners has raised its stake in the drug discovery shop and is reportedly considering a buyout bid.
Bloomberg reported details of the M&A chatter, quoting anonymous sources familiar with the matter. A spokesperson for Triton declined to comment, but Bloomberg’s sources say the private equity firm wants to meet with top Evotec executives. As it stands, Triton is still mulling its options, according to the report, and could opt against making a formal offer to acquire Evotec.
Other details are in the public domain. Financial regulatory filings show Triton recently raised its stake in Evotec. With Triton’s holdings now nearing 10%, the company will need foreign investment approval to significantly increase its stake.
Making a move to acquire Evotec will also require the support of the company’s other major investors. Evotec listed three investors with stakes of 5% or greater in its 2023 annual report. At that time, T. Rowe Price was the bigger shareholder, with a 10.1% stake, followed by Novo Holdings—the controlling shareholder of Novo Nordisk—at 8.4% and Abu Dhabi’s sovereign fund Mubadala Investment at 6.6%.
Investors in Evotec have seen the value of their holdings decrease this year, in which time the company’s share price has fallen from $11.40 to $4.13 on Nasdaq. The report of Triton’s interest in Evotec sent the company’s share price up almost 22% in Europe.
Evotec has been trying to turn its business around, embarking on a “priority reset” in April that has seen it exit the gene therapy space, jettison employees and sell an active pharmaceutical ingredient plant. The steps are part of the response to what Evotec has called a “weak market” that suffers from overcapacity.
The company, a service provider that has built a pipeline of partnered programs, is reviewing its strategy. Evotec CEO Christian Wojczewski outlined his thinking about the pipeline in response to a question on the company’s third-quarter results earnings call last week.
“You should not imply that we're dumping the pipeline or that we're doing anything else, reducing the pipeline, at this point in time. It's a healthy pipeline we have. We believe that there are good assets,” Wojczewski said. “Of course, it will be part of the review ... when it comes to the pockets of value creation in the future, how much effort we will put into that going forward.”