Private equity firm Permira has reportedly submitted a bid to acquire LivaNova (NSDQ:LIVN), which is valued at $3.7 billion.
The Financial Times reported that people familiar with the situation cited an offer made in mid-February that valued London-based LivaNova’s shares at more than $80 per share. The report said talks are ongoing but there is no certainty that an agreement will be struck.
Within one day of The Financial Times’ report, shares of LivaNova are currently trading up 3.9% at $81.59 per share in early-morning trading today.
Analysts from Needham, citing the report, said an October 2020 analysis valued Livanova’s base business at $79 per share, which falls in line with Permira’s reported valuation.
“This news isn’t too surprising in our view given that LIVN was targeted by an activist last fall and prior media reports that LIVN was a potential acquisition target,” Needham analysts wrote. “We think that a financial buyer of LIVN could make more sense than a strategic buyer since a financial buyer may be better able to execute potential strategic moves such as a break-up and we think that financial buyer may be more willing to wait for potential value-creating pipeline developments that are expected over the next 2-3 years (i.e. the RECOVER treatment-resistant depression trial and the ANTHEM-HFrEF heart failure trial) that public equity investors are unwilling to assign much value to currently.”
The analysts had earlier this year downgraded LivaNova from “Buy” to “Hold” amid skepticism over management breaking up the company. Those views may have been influenced by the December announcement of LivaNova’s sale of its heart valve business.
Analysts concluded that a potential deal makes sense and is believable, but they offered caution to investors, given that previous reports about possible acquisitions of LivaNova did not come to fruition.