Lifecore Biomedical has agreed to be acquired by private equity firm Webster Equity Partners in a transaction that could be worth as much as $663.7 million if the company achieves specified performance targets. Under the terms of the agreement announced Monday, Lifecore shareholders will receive $6.28 in cash for each share of common stock at closing, along with a contingent value right (CVR) tied to future performance. The upfront consideration represents a 49.5% premium to Lifecore’s closing share price on September 25, the last full trading session before the deal was announced. The transaction is expected to take Lifecore private, with the company’s common stock to be delisted from Nasdaq following completion. Lifecore said it plans to retain its headquarters in Chaska, Minnesota, and continue operating under the Lifecore name.

Lifecore develops and manufactures injectable pharmaceutical products for customers as a contract development and manufacturing organization (CDMO). Paul Josephs, Lifecore’s president and CEO, says the company is approaching an inflection point, with several customer programs potentially reaching commercialization by the end of 2028. In announcing the transaction, Josephs said Webster’s resources and experience could help Lifecore advance its growth plans.

The deal includes up to $160 million in potential CVR payments for existing stockholders and certain equity award holders. The payments will depend on Lifecore reaching specified revenue and EBITDA milestones in 2028, 2029 and 2030. The milestone structure provides for a potential $30 million payment based on 2028 performance, followed by $45 million tied to 2029 revenue and $85 million associated with a 2030 EBITDA target. The agreement also includes provisions allowing for catch-up payments and other adjustments. If all of the performance payments are earned, the combined upfront and contingent consideration could reach approximately $9.67 per common share, according to Lifecore. That would represent a potential 130.2% premium to the September 25 closing price.

Lifecore’s Series A preferred shareholders will receive a cash payment at closing based on the security’s contractual “Conversion Amount,” together with CVRs linked to the number of common shares into which their preferred stock could be converted at closing. As of June 30, the Conversion Amount was approximately $50.2 million, equivalent to about $6.53 per common share underlying the preferred stock. The amount will increase through closing as additional dividends accrue. The Series A preferred shares carry a 7.5% annual dividend that is paid in kind.

Webster Equity Partners Partner Matthew Beer said the firm plans to combine its resources with Lifecore’s CDMO capabilities as it works toward growth and profitability. The transaction is currently expected to close later this year. Completion remains subject to Lifecore shareholder approval, regulatory clearances and other customary closing conditions. Lifecore’s board and its transaction committee have unanimously approved the merger agreement and are recommending that shareholders approve the deal. Webster has obtained committed debt and equity financing for the acquisition. The financing commitments include debt from MidCap Financial Trust, MSD Partners and Alcon Research, along with equity commitments from funds advised by Webster Equity Partners.

The agreement also contains a 30-day go-shop provision. During that period, Lifecore and its advisers can solicit and evaluate competing acquisition proposals. The board can terminate the agreement to accept a superior proposal if the conditions outlined in the merger agreement are satisfied. Lifecore said there is no assurance that the go-shop process will result in another offer and that it does not currently intend to provide updates unless disclosure becomes appropriate or required.

If completed, the acquisition will transition Lifecore from a publicly traded company to a privately held business while leaving its Minnesota headquarters and existing corporate identity in place.

For more information, visit www.lifecore.com.