Certara shares soar after Arsenal buys back EQT's stake

Longtime Certara shareholder Arsenal Capital has committed to making a new $449 million investment, buying out EQT's stake in the maker of biosimulation software for drug development.

Why it matters: Arsenal is paying a big premium over Certara's recent trading price, sending shares skyrocketing nearly 20% early Monday.

• Arsenal says it will acquire roughly 30 million shares at $15 per share, reflecting a 40%-plus premium over Friday's closing share price of $10.65.
• Before the share pop, Certara's stock had lost around 62% of its value year-to-date.

Catch up quick: Arsenal first invested in Certara in December 2013, remaining an investor through its majority sale to EQT in 2017 at $850 million value.

• Certara, headquartered in Princeton, New Jersey, went public in December 2020 at a $3.5 billion valuation.
• Through both the sale to EQT and subsequent IPO, Arsenal has retained an undisclosed minority stake.

💭 Sarah's thought bubble: No investor knows Certara as well as Arsenal, so who better to reinvigorate the business?

Details: The investment will boost Arsenal's stake to 22% of diluted shares outstanding from the current 4%.

• Arsenal, subject to maintaining a certain ownership position, has the right to nominate up to two board members including current board member Stephen McLean, a senior partner at Arsenal.
• After the deal closes, Arsenal operating partner David Spaight is expected to join the board, while EQT's Eric Liu and Ethan Waxman will step down.