Harvard Bioscience spinoff of HART

Harvard Bioscience (HBIO), “a global developer, manufacturer and marketer of a broad range of tools to advance life science research and regenerative medicine”, is spinning off its subsidiary, Harvard Apparatus Regenerative Technology, Inc. (HART). HART, a regenerative medicine company, has no revenue and will use to proceeds to general corporate expenses. 

Here are the details of the spinoff:

  • Selling 1.7 million share at a range of $10-$12. Underwriters also have the option of exercising an additional 255,000 shares at the IPO price.
  • HBIO will own over 80% or 8 million shares after the IPO.
  • HBIO plans to distribute the shares to shareholders 4 months after the IPO.


HBIO is a $168 million dollar company. In 2012:

  • Its net income, if you exclude discontinued operations, was $1.5 million.
  • Amortization of intangible assets amounted to $2.7 million
  • Expenses for HART were around $6.7 million. HBIO will earn around $4.6 million at the current tax rate after HART expenses are wiped off the books.  

After the HART IPO, HBIO looks to have about $9 million in FCF. If we value it at 10 times FCF, HBIO will have a value of $90 million. The 8 million shares HBIO will own after the IPO will be valued at $88 million if HART IPOs at $11/share. 

So, the total sum of parts value of HART is around $178 million. It is not that undervalued. However, a lot of it depends on the price of HART. I will keep an eye on both of these stocks after the IPO to see if there ever a huge value discrepancy.  

Disclosure: I do not own any of the stocks mentioned.