Rand Capital Announces Portfolio Company SciAps, Inc. to be Acquired by Spectris plc

Rhea-AI Summary

Rand Capital (NASDAQ: RAND) announced that its portfolio company SciAps, Inc. is set to be acquired by Spectris plc for up to $260 million. The deal includes an upfront payment of $200 million and up to $60 million in deferred payments, pending certain financial metrics. Completion is expected later this year, subject to customary conditions and regulatory approvals.

Rand, which holds a 6% equity stake in SciAps, initially invested $3.1 million and has invested a total of $5.2 million, including recent debt financing. SciAps represents 8.5% of Rand's net asset value as of March 31, 2024. This acquisition marks a significant milestone for Rand, which has shifted focus to debt financing while maintaining strategic minority equity investments.

Positive

• SciAps to be acquired for up to $260 million, including $200 million upfront.
• Rand holds a 6% equity stake in SciAps, initially invested $3.1 million.
• SciAps represents 8.5% of Rand's net asset value.
• Transaction expected to close later this year.

Negative

• Deferred payments up to $60 million are contingent on SciAps meeting specific financial metrics.

Insights

Financial Analyst

The acquisition of SciAps, Inc. by Spectris plc for up to $260 million is a significant event for Rand Capital Corporation. This deal represents a successful exit for Rand, which initially invested in SciAps nearly eleven years ago. The upfront consideration of $200 million and the additional $60 million contingent on financial metrics will likely provide Rand with a considerable return on its investment.

Rand's initial equity investment, subsequent follow-on equity investments and a secured note totaling $5.2 million have yielded substantial returns, considering their 6% equity stake. This exit will not only improve Rand's net asset value but also provide liquidity to reinvest in new opportunities.

For retail investors, this event underscores Rand Capital's ability to identify and nurture high-growth companies, potentially leading to lucrative exits. However, it is essential to consider the deferred payment's contingencies and the customary closing conditions which could affect the final transaction amount.

Market Research Analyst

This acquisition places SciAps, a company specializing in analytical instruments, under the umbrella of Spectris, a leader in precision instrumentation. For the market, this consolidation may lead to enhanced product offerings and better market penetration.

Retail investors should note that such acquisitions can lead to synergistic benefits, including expanded R&D capabilities and broader distribution networks. However, it is critical to monitor how well the integration is managed, as it can significantly impact the success of the acquisition.

BUFFALO, N.Y.--(BUSINESS WIRE)-- Rand Capital Corporation (Nasdaq: RAND) (“Rand” or the “Company”), a business development company providing alternative financing for lower middle market companies, announced today that SciAps, Inc., a portfolio company in which Rand has an equity and debt investment, is to be acquired by Spectris plc (LSE: SXS) for consideration of up to $260 million comprised of up-front consideration of $200 million plus a deferred element of up to $60 million payable subject to SciAps attaining certain financial metrics. The transaction is subject to customary closing conditions and regulatory approvals, with completion expected to take place later this year.

Daniel P. Penberthy, President and CEO of Rand Capital, noted, “We are excited for the SciAps team to join Spectris and embark on the next leg of growth with an ideal strategic partner. SciAps was among one of the last holdings from our legacy portfolio, where we nurtured it through equity investments from its very early stages, and later provided debt financing for working capital to support its rapid growth. Rand has been a long-time trusted partner of SciAps and its co-investors, which we believe contributed to its success.”

SciAps has been in the Rand portfolio for nearly eleven years during which time Rand provided an initial equity investment, several follow-on equity investments and most recently invested $2.1 million in August 2021 as a secured note. Rand holds approximately 6% of the equity of SciAps with a cost basis of $3.1 million. Total cost of the investment was $5.2 million including the recent debt instrument. The portfolio company represented 8.5% of Rand’s net asset value as of March 31, 2024.

Mr. Penberthy concluded, “While Rand is now more currently focused on debt financing for lower to middle market businesses, this successful exit supports our continued attention to maintaining a minority equity investment as part of our total investment into our portfolio companies which we believe can contribute to strong returns with future exits.”

More detail about the Spectris acquisition of SciAps Inc. can be found at Spectris’ investor relations website.

ABOUT RAND CAPITAL

Rand Capital (Nasdaq: RAND) is an externally managed business development company (BDC). The Company’s investment objective is to maximize total return to its shareholders with current income and capital appreciation by focusing its debt and related equity investments in privately-held, lower middle market companies with committed and experienced managements in a broad variety of industries. Rand invests in early to later stage businesses that have sustainable, differentiated and market-proven products, revenue of more than $2 million and a path to free cash flow or up to $5 million in EBITDA. The Company’s investment activities are managed by its external investment adviser, Rand Capital Management, LLC. Additional information can be found at the Company’s website where it regularly posts information: https://www.randcapital.com/.

Safe Harbor Statement

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than historical facts, including but not limited to statements regarding the timing for completion of the acquisition of SciAps Inc. by Spectris plc, the strategy of the Company and its outlook; statements regarding the implementation of the Company’s strategy and its growth trajectory; and any assumptions underlying any of the foregoing, are forward-looking statements. Forward-looking statements concern future circumstances and results and other statements that are not historical facts and are sometimes identified by the words “may,” “will,” “should,” “potential,” “intend,” “expect,” “endeavor,” “seek,” “anticipate,” “estimate,” “overestimate,” “underestimate,” “believe,” “could,” “project,” “predict,” “continue,” “target” or other similar words or expressions. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove to be incorrect, actual results may vary materially from those indicated or anticipated by such forward-looking statements. The inclusion of such statements should not be regarded as a representation that such plans, estimates or expectations will be achieved. Important factors that could cause actual results to differ materially from such plans, estimates or expectations include, among others, (1) evolving legal, regulatory and tax regimes; (2) changes in general economic and/or industry specific conditions; and (3) other risk factors as detailed from time to time in Rand ’s reports filed with the Securities and Exchange Commission (“SEC”), including Rand’s annual report on Form 10-K for the year ended December 31, 2023, quarterly reports on Form 10-Q, and other documents filed with the SEC. Consequently, such forward-looking statements should be regarded as Rand’s current plans, estimates and beliefs. Except as required by applicable law, Rand assumes no obligation to update the forward-looking information contained in this release.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240710319941/en/

Company:

Daniel P. Penberthy

President and CEO

716.853.0802

dpenberthy@randcapital.com

Investors:

Deborah K. Pawlowski / Craig P. Mychajluk

Kei Advisors LLC

716-843-3908 / 716-843-3832

dpawlowski@keiadvisors.com / cmychajluk@keiadvisors.com

Source: Rand Capital Corporation

FAQ

What is the value of the SciAps acquisition by Spectris plc?

The acquisition is valued at up to $260 million, with $200 million upfront and up to $60 million in deferred payments.

When is the SciAps acquisition expected to be completed?

The acquisition is expected to be completed later this year, subject to customary closing conditions and regulatory approvals.

What percentage of SciAps is owned by Rand Capital?

Rand Capital holds approximately 6% of the equity of SciAps.

How much has Rand Capital invested in SciAps?

Rand Capital has invested a total of $5.2 million in SciAps, including an initial equity investment of $3.1 million and subsequent debt financing.

What is the impact of the SciAps acquisition on Rand Capital's net asset value?

SciAps represents 8.5% of Rand Capital's net asset value as of March 31, 2024.