Triton is considering a takeover deal for drug developer Evotec

(Bloomberg) — Triton Partners is considering a takeover bid for Germany’s Evotec SE after the private equity firm became one of the drug developer’s largest shareholders, according to people familiar with the matter.

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Triton is among several investment firms that have explored a deal for Evotec in recent months, the people said, asking not to be identified because the information is private. Any takeover of Evotec by a private equity firm could be complicated by the fact that the company is expected to report negative free cash flow this year and next, the people said.

Last week, Triton increased its stake in Evotec to 9.99% through a series of transactions, according to its latest US regulatory filing. To increase its stake to 10% or more, it would need foreign investment approval. Any significant move would also need the support of Evotec’s other major shareholders – Novo Holdings A/S, the parent company of drugmaker Novo Nordisk A/S, as well as Abu Dhabi’s sovereign wealth fund Mubadala Investment Co.

Shares of Evotec have fallen about 58% this year, giving the company a valuation of about 1.6 billion euros ($1.7 billion). The fall in share price has prompted Evotec to talk to defense consultants amid fears the company is vulnerable to a takeover, Bloomberg News reported in June. The stock rose as much as 27% on Monday, its biggest intraday gain in nearly four years.

Deliberations are ongoing and Triton may decide against making a formal offer, the people said. Representatives for Triton and Evotec declined to comment.

Evotec develops drug discovery programs with biotech and pharmaceutical companies in areas such as cardiovascular disease, oncology and immunology, according to its website.

Chief Executive Christian Wojczewski, who took up his position at Evotec in July, said in a conference call last week that his job was to restore confidence and provide investors with clarity and reliability. The previous CEO Werner Lanthaler resigned for personal reasons. The company later said Lanthaler failed to timely report stock trades, adding that the failure was unrelated to his exit.

According to its website, Triton has raised over €18 billion through its private equity and credit investment strategies. The focus is on investments in European companies in the business services, industrial technology and healthcare sectors. In 2022, the buyout company purchased Clinigen Group, a UK-based specialist pharmaceutical company.

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