RTW Biotech Opportunities (RTW ) is to swell its portfolio by two thirds with the acquisition of Arix Bioscience (ARIX), an AIM-listed investment company once backed by former fund manager Neil Woodford.

The all-equity transaction will see RTW issue 1.4663 shares for each Arix share to buy its rival’s assets, boosting its net asset value by 63% to $550m (£452m) and increasing liquidity and providing a more efficient cost base, the company said.

The agreed deal values Arix shares at 143p, a 46% premium to their closing price on 12 July, the day before it announced it was undertaking a strategic review, but a 21% discount to the September NAV of 180p per share.

Arix has approximately $128m of liquid assets, of which approximately $60m is expected to be cash following completion, and RTW intends to deploy that immediately into innovative life science companies.

RTW’s board chaired by William Simpson said it was a unique opportunity to buy into a depressed market while innovation was booming.

Chief investment officer Rod Wong added that the acquisition ‘is a step-change accelerator to our vision for RTW Bio to be a UK-listed fund with meaningful scale that invests in innovative life science businesses in the UK and globally.’

As part of the deal, RTW will buy the 25.5% stake in Arix held by Acacia, its largest shareholder. The Nasdaq-listed company bought its holding from Woodford, who was forced to sell a slew of biotech holdings from the Woodford Equity Income fund in a cut-price deal in June 2020 following the implosion of his firm in 2019. Woodford went on to advise Acacia on its portfolio.

The transaction is expected to complete in the first quarter of 2024.  

The £239m Arix announced a strategic review in July after the shares fell to a ‘significant’ discount to NAV despite a healthy balance sheet, with the board noting the deficit had emerged during a sustained period of investor risk aversion. Chief executive Robert Lyne recently announced he would leave at the end of the year.  

RTW’s own shares trail on a 21% discount. In early trading they were unchanged at $1.14.