Jonathan Milner, former CEO and founder of antibody provider Abcam, is continuing his attempts to convince shareholders to vote against the company’s $5.7bn acquisition by Danaher despite a recommendation in favour by proxy advisor Institutional Shareholder Services (ISS).

The saga began earlier this year, when Milner announced his opposition to the sale citing concerns that it “substantially undervalues” the company. This has clearly not been enough on its own to sway shareholders, as Milner unveiled on Monday (16 October) his plan for “Abcam 3.0”.

His reasoning remains as it was back in August – that the sale price of $24 per share is undervaluing the company’s short-term growth potential. While he maintains his willingness to see the company go to Danaher or “another suitor at a fair price”, the likelihood of a tall dark stranger sweeping in should this deal fall through is low.

What’s Milner’s plan?

Although Milner’s penchant for the theatrical (by the standards of the medical world) sometimes leads him to favour buzzwords – his Abcam 3.0 aims include “returning Abcam to best-in-class Corporate Governance” and “achieving execution excellence” – the open letter published last week (10 October) shows that there is more than just pride behind his opposition.

Milner notes that the ‘Amazon of antibodies’, as Abcam is sometimes known, had an average enterprise value/next twelve months (EV/NTM) EBITDA valuation multiple of 22.1, meaning that experts believed a buyout of the company should pay 22.1 times the estimated income of a company in the next financial year. The $24 per share price is only 21.4 times NTM EBITDA. This means, in Milner’s words, “Abcam is essentially being sold without any premium for control.”

Reasons to sell

Not everyone sees it this way, though. The ISS – a body that advises firms that hold shares in a wide range of companies on strategic decision-making – has advised a vote in favour of the acquisition. Its report is critical of Milner’s plan, noting that its uncertainty “due to lack of details regarding his proposed nominees or his potential go-forward plan if he were to take over as CEO stands in stark contrast to the certainty provided by the proposed cash offer from DHR.”

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Uncertainty is the crux of the issue, it seems. Milner believes that Abcam can continue to grow without acquisition and that a restructuring of the board (with him at the top) will lead to better long-term outcomes. The ISS are unsurprisingly more risk-averse.

Who’s right?

Milner has a vested interest in seeing the company he birthed grow in the way he sees fit, and the Danaher acquisition would sideline him, particularly after such vocal opposition. More mainstream investors are likely to be happy with a solid valuation that provides a return on investment. Neither side of the battle is definitively right or wrong, but they are approaching the company from very different perspectives.

Despite the feuding in public, the company continues to operate as normal, posting new jobs in the US and UK. The number of active listings has in fact increased since August, when the fight over the acquisition began.

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