FuturaGene soars 30% on new Brazilian bid

 

 

Shares in FuturaGene jumped 30% after the biotechnology group revealed it had agreed an offer, at a hefty premium, from its Brazilian partner Suzano Papel e Celulose.

 

Suzano has bid GBP59.2 million (US$88 million) in cash for FuturaGene, valuing shares in the UK genetic research and development group at GBP0.90.

 

The offer - which follows an announcement from FuturaGene in February of an approach offering little premium – is pitched 35% above the closing price of the shares on Wednesday.

 

However, the stock has performed poorly over the last two months, leaving Suzano's offer only marginally above where FuturaGene shares stood at the time of the February statement.

 

FuturaGene chairman Mark Pritchard said this offer, which has been recommended by the board, represented an endorsement of the group's progress in genetic technologies aimed at raising yields, and developing crops able better to withstand arid and salty conditions.

 

While the group, which also unveiled annual results, said revenues quadrupled last year, they remained small, at GBP181,000. The soaring costs of developing FuturaGene's products, and getting them to market, widened the group's after-tax loss by 40% to GBP2.18 million.

 

Suzano's 500,000-hectare land holdings include large stands of alfalfa, corn, cotton and poplar, a core area for FuturaGene research.

 

The Brazilian group already owns 7.1% of FuturaGene, trimming to GBP55 million the outgoings needed to pay for the deal.

 

Other major FuturaGene shareholders include Mr Pritchard, who owns 6.0%, entrepreneur Iraj Parvizi, with a 15.7% stake, and the International Institute of BioScience Research and Development, a Delaware corporation, which has a 7.6% holding.

 

The deal stands to make a healthy profit for investors who backed a GBP3 million cash call, priced at GBP0.50 a share, in December.