NGM Bio Has Entered into a Definitive Agreement and Plan of Merger with Certain Affiliates of The Column Group, LP
NGM Bio announced a definitive Agreement and Plan of Merger with Atlas Neon Parent, Inc. and Atlas Neon Merger Sub, offering $1.55 per share in cash, an 80% premium over the closing share price. The acquisition, valued at $135 million, involves a cash tender offer for all outstanding shares not held by affiliates of The Column Group, LP. The transaction is recommended by a Special Committee of independent directors and is expected to close in the second quarter of 2024.
The acquisition of NGM Biopharmaceuticals, Inc. by Atlas Neon Parent, Inc. represents a significant premium of 80% over the closing share price prior to the announcement. This is a substantial markup and is indicative of the purchaser's confidence in the intrinsic value of NGM Bio. The total equity value of the transaction is $135 million, which should be considered in the context of NGM Bio's reported cash and marketable securities of approximately $144.2 million as of the end of the last fiscal quarter. This suggests that the acquisition price is closely aligned with the company's net cash position, a factor that may influence the perception of value among the Unaffiliated Stockholders.
The absence of a financing contingency implies that the purchaser has secured the necessary funds to complete the transaction, providing a degree of certainty to stockholders. From a financial perspective, the transaction's success hinges on the tender of a majority of shares held by Unaffiliated Stockholders. The decision by the Rollover Stockholders to contribute their shares rather than cashing out could be seen as a vote of confidence in the future prospects of NGM Bio under private ownership.
For investors, the key considerations will be the fairness of the offer price and the strategic rationale behind the acquisition. The premium offered may reflect not just the current financial health of NGM Bio, but also the potential value of its therapeutic pipeline and proprietary technology. However, the loss of public market liquidity and potential upside from future growth will need to be weighed against the immediate cash premium offered.
The role of the Special Committee in this transaction is critical as they serve as fiduciaries for the Unaffiliated Stockholders. Their unanimous recommendation suggests a rigorous evaluation process and an assessment that the deal terms are in the best interest of these stockholders. The Special Committee's use of independent legal and financial advisors further underscores the integrity of their review process.
Legal counsel's involvement is crucial in navigating the complexities of a merger agreement, ensuring compliance with regulatory requirements and protecting the interests of all parties involved. The legal framework will also govern the tender offer process, the subsequent merger and the conversion of shares into cash for stockholders not participating in the offer.
It is important for Unaffiliated Stockholders to understand their rights in this context, including any rights to dissent from the transaction and the legal implications of such a decision. The acquisition, once completed, will result in NGM Bio's delisting from Nasdaq, effectively ending its status as a public company and the regulatory obligations that come with it. This transition will have legal and operational implications for the company's governance and reporting structures.
The biotechnology sector is known for its high-risk, high-reward nature, with significant capital required for research and development. NGM Bio's need for 'significant additional funding' as noted by the Special Committee Chair, Suzanne Sawochka Hooper, is a common challenge in the industry. The decision to go private may provide NGM Bio with more flexibility to manage its capital allocation and strategic direction without the pressures of quarterly reporting and short-term market expectations.
Analysis of the biotech market shows that private ownership can sometimes accelerate the development of novel therapeutics by allowing companies to focus on long-term goals. However, it also removes the opportunity for public investors to participate in potential future gains. The industry trend towards consolidation and the interest from larger entities in acquiring promising biotech firms could have influenced the Special Committee's decision to approve the transaction, believing that private ownership might better support the company's growth trajectory.
Understanding the broader market dynamics, including the competitive landscape of NGM Bio's therapeutic areas and the potential for strategic partnerships or additional acquisitions post-transaction, will be essential in assessing the long-term implications of this acquisition for the industry as a whole.
02/26/2024 - 09:03 AM
NGM Bio stockholders to receive $1.55 per share in cash, an 80% premium over the closing share price on the last trading day prior to disclosure of receipt from The Column Group of a non-binding expression of interest in purchasing shares in a going-private transaction Based on a thorough exploration and review of strategic and financial alternatives, a Special Committee of independent and disinterested directors unanimously recommends the transaction SAN FRANCISCO, Feb. 26, 2024 (GLOBE NEWSWIRE) -- NGM Biopharmaceuticals, Inc. (“NGM Bio”) (Nasdaq: NGM), a biotechnology company focused on discovering and developing transformative therapeutics for patients, today announced that it has entered into a definitive Agreement and Plan of Merger (the “Merger Agreement”) under which Atlas Neon Parent, Inc. (“Purchaser”) and Atlas Neon Merger Sub, Inc. (“Merger Sub”) will acquire NGM Bio through a cash tender offer to be commenced by Merger Sub for all outstanding shares of NGM Bio not held by affiliates of The Column Group, LP and certain other stockholders, as described below, at a price per share of $1.55 in cash. Purchaser and Merger Sub are affiliates of The Column Group, LP (together with certain of The Column Group, LP’s affiliates, the “TCG Stockholders”), NGM Bio’s longest and largest stockholder, holding approximately 26% of NGM Bio’s outstanding shares.
The TCG Stockholders and certain other existing stockholders of NGM Bio (the “Rollover Stockholders”) have agreed to contribute their shares of NGM Bio stock to Purchaser as a part of the transaction rather than receive the cash price per share.
This price per share corresponds to a total equity value of $135 million on a fully diluted basis and represents an 80% premium over the last trading day closing price (December 29, 2023) prior to NGM Bio’s Form 8-K confirming receipt from the TCG Stockholders of a non-binding expression of interest in exploring and evaluating a potential acquisition of all of the outstanding shares of common stock of NGM Bio not already owned by the TCG Stockholders in a going-private transaction. NGM Bio’s cash, cash equivalents and short-term marketable securities were $166.0 million as of September 30, 2023 and an estimated $144.2 million as of December 31, 2023.
Following a thorough exploration and review of strategic and financial alternatives with the assistance of its legal and financial advisors, a Special Committee of the NGM Bio Board of Directors (the “Special Committee”), consisting solely of independent and disinterested members of the NGM Bio Board of Directors (the “Board”), determined that the acquisition by Purchaser is in the best interests of NGM Bio stockholders (excluding the TCG Stockholders, Purchaser, Merger Sub, the Rollover Stockholders, the members of the Board and the officers of NGM Bio subject to Section 16 of the Exchange Act, referred to as the “Unaffiliated Stockholders”), and unanimously recommended approval of the Merger Agreement to the Board. The Special Committee and NGM Bio management team explored a range of strategic options, including engaging with multiple potential third party acquirors, before negotiating and entering into the Merger Agreement.
“We conducted a thorough review of our financial and strategic alternatives, including remaining a publicly held company, with particular focus on NGM Bio’s ongoing need for significant additional funding. Based on this review, we believe that this negotiated transaction for Purchaser to acquire NGM Bio is in the best interest of the Unaffiliated Stockholders,” said Suzanne Sawochka Hooper, an independent member of the Board and Chair of the Special Committee.
Based upon the recommendation of the Special Committee, with the assistance of its legal and financial advisors, the Board determined that the acquisition by Purchaser is in the best interests of the Unaffiliated Stockholders, and approved the Merger Agreement.
Closing of the tender offer is subject to the satisfaction of certain customary conditions, including the tender of NGM Bio shares representing at least a majority of the total number of outstanding shares held by the Unaffiliated Stockholders. The tender offer is not subject to a financing contingency.
Promptly following the closing of the tender offer, Merger Sub will merge with and into NGM Bio, and all remaining shares not tendered in the offer, other than dissenting shares, treasury shares and rollover shares held by the TCG Stockholders, Purchaser and any other subsidiary of Purchaser, or the Rollover Stockholders, will be converted into the right to receive a price per share of $1.55 in cash. The acquisition is expected to close in the second quarter of 2024. If completed, the transaction will result in NGM Bio becoming a privately held company and its shares will no longer be listed on Nasdaq.
Advisors
Guggenheim Securities, LLC is acting as exclusive financial advisor and Hogan Lovells US LLP is acting as legal counsel to the Special Committee. Paul, Weiss, Rifkind, Wharton & Garrison LLP is acting as legal counsel to Purchaser.
About NGM Biopharmaceuticals, Inc.
NGM Bio is focused on discovering and developing novel, life-changing medicines for people whose health and lives have been disrupted by disease. NGM Bio’s biology-centric drug discovery approach aims to seamlessly integrate interrogation of complex disease-associated biology and protein engineering expertise to unlock proprietary insights that are leveraged to generate promising product candidates and enable their rapid advancement into proof-of-concept studies. All therapeutic candidates in the NGM Bio pipeline have been generated by its in-house discovery engine, always led by biology and motivated by unmet patient need. Visit us at www.ngmbio.com for more information.
Cautionary Notice Regarding Forward-Looking Statements
Statements contained in this communication regarding matters that are not historical facts are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “believes,” “estimates,” “expects,” “focused,” “continuing to,” “seeking,” “will” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are intended to identify forward-looking statements. These statements include those related to: the ability of NGM Bio and Purchaser to complete the transactions contemplated by the Merger Agreement, including the parties’ ability to satisfy the conditions to the consummation of the tender offer contemplated thereby and the other conditions set forth in the Merger Agreement, statements about the expected timetable for completing the transactions, NGM Bio’s and Purchaser’s beliefs and expectations and statements about the benefits sought to be achieved by Purchaser’s proposed acquisition of NGM Bio, the potential effects of the acquisition on both NGM Bio and Purchaser, the possibility of any termination of the Merger Agreement, estimates relating to NGM Bio’s past, current or future financial condition and other statements that are not historical fact.
Because such statements deal with future events and are based on NGM Bio’s current expectations, they are subject to various risks and uncertainties, and actual results, performance or achievements of NGM Bio could differ materially from those described in or implied by the statements in this communication. These forward-looking statements are subject to risks and uncertainties, including, without limitation, risks and uncertainties associated with: the timing of the tender offer and the subsequent merger; uncertainties as to how many of the Unaffiliated Stockholders will tender their shares in the tender offer; the risk that competing offers or acquisition proposals will be made; the possibility that various conditions to the consummation of the tender offer and the subsequent merger may not be satisfied or waived; the occurrence of any event, change or other circumstance that could give rise to the termination of the Merger Agreement, including in circumstances which would require NGM Bio to pay a termination fee; the effects of disruption from the transactions contemplated by the Merger Agreement; the risk that stockholder litigation in connection with the tender offer or the merger may result in significant costs of defense, indemnification and liability; and other risks and uncertainties affecting NGM Bio and its development programs, including those discussed in the section titled “Risk Factors” in NGM Bio’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 28, 2023, subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings and reports that NGM Bio makes from time to time with the SEC. Except as required by law, NGM Bio assumes no obligation to update these forward-looking statements, which speak only as of the date they are made, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.
Additional Information and Where to Find It
The tender offer for the outstanding shares of common stock of NGM Bio referenced in this communication has not yet commenced. This communication is for informational purposes only, is not a recommendation and is neither an offer to purchase nor a solicitation of an offer to sell shares of common stock of NGM Bio or any other securities. This communication is also not a substitute for the tender offer materials that Purchaser will file with the SEC upon commencement of the tender offer. At the time the tender offer is commenced, Purchaser will file with the SEC a Tender Offer Statement on Schedule TO and a Transaction Statement on Schedule 13E-3 (“Schedule 13E-3”), and NGM Bio will file with the SEC a Solicitation/Recommendation Statement on Schedule 14D-9 and a Schedule 13E-3.
NGM BIO’S STOCKHOLDERS ARE URGED TO READ THE TENDER OFFER STATEMENT (INCLUDING AN OFFER TO PURCHASE, A RELATED LETTER OF TRANSMITTAL AND CERTAIN OTHER TENDER OFFER DOCUMENTS), THE SOLICITATION / RECOMMENDATION STATEMENT AND THE SCHEDULES 13E-3 WHEN SUCH DOCUMENTS BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT SHOULD BE READ CAREFULLY BEFORE ANY DECISION IS MADE WITH RESPECT TO THE TENDER OFFER.
When filed, NGM Bio’s stockholders and other investors can obtain the Tender Offer Statement, the Solicitation/Recommendation Statement, the Schedules 13E-3 and other filed documents for free at the SEC’s website at www.sec.gov. Copies of the documents filed with the SEC by NGM Bio will be available free of charge on the Investors & Media page of NGM Bio’s website, www.ngmbio.com , or by contacting NGM Bio at ir@ngmbio.com . In addition, NGM Bio’s stockholders may obtain free copies of the tender offer materials by contacting the information agent for the tender offer that will be named in the Tender Offer Statement.
Availability of Other Information about NGM Biopharmaceuticals
NGM Bio intends to use the Investors & Media page of its website (https://ir.ngmbio.com
For further information, please contact:
NGM Biopharmaceuticals, Inc.
Investor Contact:
ir@ngmbio.com
Media Contact:
media@ngmbio.com
The price per share offered in the cash tender offer is $1.55.
The total equity value of the acquisition is $135 million.
The acquisition is expected to close in the second quarter of 2024.
Guggenheim Securities, LLC is the exclusive financial advisor, Hogan Lovells US LLP is the legal counsel to the Special Committee, and Paul, Weiss, Rifkind, Wharton & Garrison LLP is the legal counsel to Purchaser.
An 80% premium is offered over the closing share price.
