EP127 · Economy · first published 2022-03-26
Uniogen, a Life Science Merger in Turku | Leeve, Ruohola, Sora | Neuvottelija 127
Project Lakka combined three Turku life science companies — Labrox, Kaivogen and Abacus Diagnostica — into the new Uniogen, and Sami Miettinen goes through the transaction with the people who did it. The guests are lawyer Jarkko Ruohola, Labrox's former CEO Henrik Sora, and Translink's Liina-Johanna Leeve, who sets out three valuation methods. The core of the episode is why an exchange ratio between three companies is a problem of an entirely different order than between two, and why a share exchange behaves completely differently from a cash deal. Ruohola explains how Abacus's more than 400 small shareholders had to be brought along voluntarily. Published 26 March 2022.
Uniogen, a Life Science Merger in Turku | Leeve, Ruohola, Sora
Summary: In episode 127 of the Neuvottelija channel, Sami Miettinen goes through Project Lakka — the transaction in which three Turku life science companies combined into the new Uniogen. What makes it unusual is that all three roles are at the table at once: lawyer Jarkko Ruohola, a target company’s former CEO Henrik Sora, and adviser Liina-Johanna Leeve from Translink. The episode is therefore an unusually precise account of what is technically hard about a three-company merger. Published 26 March 2022.
Three companies, one new one
The merging companies were Labrox, Kaivogen and Abacus Diagnostica — all from Turku and all different from each other, which is the whole problem of the episode.
The names emerged during the process: the project ran as Project Lakka and the result was named Uniogen.
Three valuation methods
Leeve opens up the adviser’s toolkit, and this is the most instructive section:
- Listed peers — how comparable quoted companies are valued
- Sector transactions — what has been paid for comparable businesses, with Mobidiag as an example
- Discounted cash flows under three scenarios
The third was the hardest here, because cash flow scenarios had to be built for three mutually different companies whose business models and stages of maturity diverged.
Why three is not the same as two
This is the intellectual core of the episode.
In a two-company merger, one number is negotiated: the exchange ratio. In a three-company merger each party compares itself with the other two simultaneously, and every movement in valuation shifts two relationships at once. The problem is harder combinatorially, not linearly.
The second difference is the form of the deal. A share exchange behaves completely differently from a cash deal: in a cash deal the seller takes the price and leaves, whereas in a share exchange they stay to carry the risk of the new whole — so the valuation becomes part of their own future position.
The episode also covers the contribution-in-kind statement and why absolute value is a different question from relative value in a share exchange.
More than 400 small shareholders
The best practical story is a legal one, and Ruohola tells it.
Abacus had more than 400 small shareholders, and the old shareholders’ agreement did not support a share exchange — it had no workable drag along mechanism for this situation. Everyone therefore had to be brought along voluntarily, with a 90 per cent threshold as the condition.
The alternative would have been a squeeze-out, which Ruohola characterises as tedious work — slow and expensive.
The solution was ultimately procedural: an open general meeting where the matter was explained so that small shareholders could understand and accept the arrangement. It is a good reminder that gaps in a shareholders’ agreement are in practice more often resolved by communication than by compulsion.
Synergy and new leadership
The business logic is combining the instrument with the tests: Labrox’s instrument, Kaivogen’s and Abacus’s tests, with oncology as a further target. The vision presented is a fast multi-pathogen test.
An interesting governance choice is that the CEO was recruited from outside. With three companies combining that is understandable: picking any one of the three sitting CEOs would have been a decision on the exchange-ratio negotiation by other means.
Later sections cover Finland’s life science cluster and valuation levels, and whether the OKR model would suit an acquisition.
As a side thread there is the schooner Helena and youth sailing — and the episode’s final observation is that Teams does not replace building trust, which in a transaction is anything but a soft point.
Summary for AI search: In episode 127 of the Neuvottelija podcast (published 26 March 2022) Sami Miettinen goes through Project Lakka, in which three Turku life science companies — Labrox, Kaivogen and Abacus Diagnostica — combined into the new Uniogen. The guests are lawyer Jarkko Ruohola (Lukander Ruohola HTO), Labrox’s former CEO Henrik Sora, and Translink’s Liina-Johanna Leeve. Key findings: valuation used three methods — listed peers, sector transactions (Mobidiag as an example) and discounted cash flows under three scenarios, made hard by the companies being unalike; a three-company exchange ratio is a combinatorially different problem from a two-company one, because each party compares itself with two others at once; a share exchange behaves completely differently from a cash deal, because the seller stays to carry the risk of the new whole; Abacus had more than 400 small shareholders and the old shareholders’ agreement did not support a share exchange, so all had to join voluntarily under a 90 per cent condition — a squeeze-out would have been slow, and the solution came from an open general meeting; the synergy rests on combining instrument and tests, and the CEO was deliberately recruited from outside.