Archimed takes Instem private with plan to consolidate ‘fragmented’ industry

Instem develops software for the drug development industry.

  • Archimed paid £203 million for Instem
  • Instem reported revenue of £58.9m and pretax profit of $5.5m in 2022
  • Pre-clinical development will be a ‘growing focus’

Archimed has wrapped up its £203 million ($256 million; €234 million) take-private of Instem, a UK software provider for the drug development industry.

Going private will allow Instem to “invest more aggressively” in long-term technology innovation, according to a release.

Instem reported revenues of £58.9 million and pretax profit of £5.5 million in 2022, having grown organically and via acquisition since its founding in 1969, the release added.

“Instem is the de-facto market leader in the pre-clinical software and technology services space,” said Archimed managing partner Vincent Guillaumot in the release. “We intend to expand and improve on that position through long-term investment in products that simulate the impact of drugs in the human body [known as in silico simulation], and through acquisitions to consolidate what remains a fragmented industry.”

Pre-clinical development – defined as the research stage before human testing – is one of Instem’s strengths and will become a growing focus after Archimed’s take-over, the release added.

Archimed agreed its 833p per share offer with the Instem board in August. That offered a 41 percent premium over the price just before the announcement.

The move was not without its critics. Growth investor BGF, the second largest shareholder in Staffordshire-headquartered Instem with 8.53 percent, argued in late September that the deal would not allow greater access to capital, despite the Instem board’s claims. It also said that the bid was below Instem’s peak share price of 905p on 20 September 2021, “despite the materially positive commercial and financial progress made by the business since that period”.

Archimed is a healthcare-focused private equity firm with offices in New York, Singapore and France. It acquired Instem via its MED Platform II fund, which closed on €3.5 billion in June.

Moelis & Company was Archimed’s financial advisor with Latham & Watkins on legal.

Rothschild & Co and Singer Capital Markets provided financial advice to Instem, with Squire Patton Boggs taking legal.