4basebio; I have changed my mind – I’m tendering my shares

4basebio AG (4BSB.D. Market Cap €103m or £94m, €2.00, 4.0% of JIC Portfolio)

I have reluctantly decided to tender all my shares in the takeover approach by Sparta AG at 2€ per share.

Walking across the Outer Hebrides has given me plenty of time to think about this situation and to make a decision.

Initially, I intended not to accept the offer and to wait and see. Wait to see what percentage Sparta, (the quoted vehicle of a William Zours) managed to acquire above the 28% it already owns. I was hoping, not much, given the derisory terms of the offer. I would then wait for the DNA business to be spun off on AIM and would most likely add to the position, funding it by reducing my position in 4basebio.

Having been in contact with other investors in 4basebio, I started to change my mind. I concluded that it is too risky to hold on. The main risk is that one ends up being a minority shareholder in 4basebio and that Sparta AG, (William Zours’ vehicle) might not have my best interests at heart. He has been very successful and I’m sure that has not been achieved by being a soft touch. He could perhaps structure deals that utilise 4basebio’s cash to the benefit of Sparta AG shareholders, such as himself, and not 4basebio’s shareholders. What complicates it more, is that he is a “very private” man and is not amenable to a meeting with shareholders. I cannot meet him and decide whether I trust him or not.

Also, I do not want to end up being invested in 4basebio, ex the DNA business. The plan for 4basebio, ex the DNA business, is to invest its considerable cash resources in quoted, early-stage biotech companies. I have enough exposure to this area through Biotech Growth Trust and Syncona.

So, after moving to think I might tender half my shares, I have now gone full circle and intend to tender the whole lot. It’s a pity because it seemed such an exciting story with little downside given the asset/cash backing.

I will keep track of the situation, and post the flotation of the DNA business on AIM, will assess whether it is worth investing. (The problem is, without the cash backing it had in 4basebio, it might not be so attractive. I will wait and see)

Accepting the offer will raise 4.0% cash, which I will put back to work as and when. Given the current state of the negotiations with the European Union, sterling is going through a bout of weakness, which improves the overall return I have made on the stock to around 10.0%.

I have not yet had a notification form Hargreave Lansdown but expect to in the next week.

Screenshot 2020-09-14 at 07.54.54