Oxford Biomedica Share Price Dropped 7.64% on Massive Capital Raise

Key points:
Oxford BioMedica shares dropped 7.64% after unveiling a share placement.
The company intends to raise £80 million to purchase another firm.
Investors seem to understand the strategic nature of the acquisition.

The Oxford BioMedica plc (LON: OXB) share price dropped 7.64% after announcing the placement of 4,858,410 new ordinary shares worth approximately £80 million to fund the purchase of another company.

The company has signed an agreement with Homology Medicines, Inc. (Nasdaq: FIXX) to acquire an 80% stake in a recently launched AAV focused manufacturing and innovation firm at an estimated enterprise value of US$175 million (£131 million).

Oxford Biomedica intends to fund the purchase by selling almost 5 million new ordinary shares in the company to existing institutional investors and ordinary shareholders via the PrimaryBiid mobile application.

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The company noted that retail and institutional investors can apply for the new shares but warned that the PrimaryBid applications might be closed early if the allotted shares are oversubscribed.

Once the share placement is completed, Oxford Biomedica will have the cash needed to acquire an 80% stake in the AAV Manufacturing and Innovation Business for a consideration of US$130 million (£97 million) payable to Hemology.

Oxford also commits to invest US$50 million (£37 million) to fund its future growth.

The company intends to complete the capital raise via a Bookbuild process that entails a Firm Placing and Conditional Placing and Retail Offer. If any of the three placings are not completed, the entire capital raise could fail.

Oxford Biomedia intends to call a general meeting of shareholders to get the necessary approvals needed to complete the capital raise. Today’s announcement is based on the unused authorities granted at the 2021 AGM.

The company expects the shares sold via the Retail Offering to start trading on the London Stock Exchange main market on or around 8.00 a.m. (London time) on 11 March 2022.

The admission of the shares is conditional on the company calling the general meeting on time and the admission of the conditional shares to trading, all of which must be completed beforehand.

Oxford BioMedica will channel the surplus funds generated from the three share placings to meet the capital requirements of the Oxbox and Windrush Innovation Centre, currently estimated at £65 million.

*This is not investment advice. Always do your due diligence before making investment decisions.

Oxford Biomedica share price.