German drug developer Evotec SE (NASDAQ:EVO) is reportedly consulting defense advisers following a significant drop in share price, raising concerns about the company's vulnerability to a takeover.
Multiple buyout firms are reportedly evaluating Hamburg-based Evotec as a potential acquisition target, initiating early discussions with advisers to assess the company's drug pipeline and strategic value.
Evotec's shares surged. The spike follows a year-to-date decline of over 60%, with the stock recently hitting its lowest since March 2017. The drop came after Intron Health analysts downgraded the stock from "buy" to "sell."
Bloomberg noted, citing sources, that despite the market activity, no formal approaches have been made, and it is expected to be several months before any concrete interest emerges.
The transition in leadership at Evotec adds another layer of complexity. In January, the company announced that CEO Werner Lanthaler would step down early for personal reasons. Subsequently, it was disclosed that Lanthaler had failed to report his stock trades on time, though this was unrelated to his departure.
Christian Wojczewski, the incoming CEO, will assume his role next month and is expected to review the situation before making any strategic decisions.
Major moves will require backing from Evotec's key shareholders, Novo Holdings A/S and Mubadala Investment Co. Novo Holdings is the parent company of drugmaker Novo Nordisk A/S (NYSE:NVO), indicating significant industry connections.
Evotec has established partnerships with major healthcare companies such as Bristol-Myers Squibb Co. (NYSE:BMY) and Eli Lilly & Co. (NYSE:LLY), focusing on developing treatments for chronic kidney disease, neuroscience, and metabolic disorders.
Most recently, Evotec said it made important scientific progress in its neuroscience collaboration with Bristol Myers Squibb, which triggered a research payment of $20 million to Evotec.
Price Action: EVO shares are up 9.09% at $4.44 at last check Thursday.
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