Acquisition and Fundraising
October 31 2003 - 1:03AM
UK Regulatory
RNS Number:5267R
Tepnel Life Sciences PLC
31 October 2003
Tepnel Life Sciences plc ("the Company" or "Tepnel")
Acquisition of Orchid Diagnostics and Placing to raise #2.8million
Introduction
Manchester, UK. 31 October 2003 (AIM: TED) The Board of Tepnel Life Sciences plc
today announces that it has signed conditional agreements with Orchid
BioSciences Inc. ("Orchid") to acquire the Orchid Diagnostics division ("Orchid
Diagnostics") of Orchid. The Board is further pleased to announce that Tepnel
proposes to raise approximately #2.83 million through a placing with
institutional and other investors to raise funds for the acquisition and for
ongoing working capital.
The Company's broker Seymour Pierce has conditionally placed 24,642,576 shares
at 11.5p with its institutional clients, raising #2,833,896 of capital (before
expenses). The issue is fully underwritten by Seymour Pierce and is conditional,
inter alia, on approval by shareholders of the resolutions to be proposed at
Tepnel's AGM to be held on 24 November 2003 and on admission of the placing
shares to trading on AIM.
Commenting on the transaction, Chief Executive Ben Matzilevich said: "This
acquisition marks a step change in our business and will add significantly to
our revenue stream with immediate effect upon completion. It is also expected to
enhance our ability to reach a much broader customer base in all important
geographies and I am delighted at such an important strategic achievement."
Information on Orchid Diagnostics
Orchid Diagnostics was established in December 2001 as a strategic business unit
of Orchid following Orchid's acquisition of the business and assets of Lifecodes
Corporation. Orchid Diagnostics is involved in the field of DNA diagnostics,
using genetic variability assessments to diagnose disease, identify disease
predisposition and match donor and recipient for organ transplantation. Orchid
Diagnostics markets products and services based on several genetic variability
testing methods. Orchid Diagnostics has its own sales force in the US and Europe
and uses a number of distributors worldwide.
Orchid Diagnostics operates principally from its head office in Stamford,
Connecticut, USA but also has operations in Orchid's facility in Abingdon, UK
and a presence in Belgium, which gives it additional access to the European
market. Orchid's Abingdon facility, which Orchid will continue to operate from,
was acquired from Astra Zeneca in February 2001. The Orchid Diagnostics Abingdon
operation performs clinical testing work and sells clinical testing products.
Orchid Diagnostics carries out HLA clinical testing work on behalf of
laboratories, private initiatives and individuals. The majority of clinical
testing work is concerned with bone marrow testing to help maintain a database
of bone marrow donors and the compatibility of donor and recipient. The Orchid
Diagnostics Abingdon operation performs clinical testing work on behalf of the
Dor Yeshorim programme, which is concerned with testing prospective couples for
those diseases to which the Ashkenazi Jewish population is predisposed.
Orchid Diagnostics principal products and services are as follows:
*Human Leukocyte Antigen ("HLA") testing currently uses a membrane onto
which DNA samples are placed for testing. HLA Typing and HLA antibody
detection is for pre and post transplant analysis. The product line includes
systems, kits and consumables for the genotyping and analysis of HLA. HLA is
a set of genetic markers used for matching donors and recipients for bone
marrow transplantation for cancer therapy, as well as for other organ
transplants.
*The LifeMatchTM instrument platform (ASHI (American Society for
Histocompatibility and Immunogenetics) accredited) is Orchid Diagnostics'
newest product and is intended to replace HLA membrane revenue since it is
suitable for automated testing systems. LifeMatch is used for the analysis
of DNA and proteins.
*ElucigeneTM is Orchid Diagnostics' line of consumable products for
genetic screening for certain diseases including cystic fibrosis ("CF").
Marketed for several years in Europe and launched in the United States in
2001, Elucigene provides a simple and accurate means of testing for the most
common genetic mutations that can cause CF. The technology is based upon
Amplification Refractory Mutation System ("ARMS") which was developed and
manufactured in Orchid's ISO 9001 and ISO 13485 accredited facilities in
Abingdon. Orchid Diagnostics Abingdon operation also performs services.
Tepnel expects that this technology platform will be expanded to include
Gaucher, venous thrombosis risk, and hereditary Haemachromatosis.
*Orchid Diagnostics also produces and markets Restrictive Fragment Length
Polymorphism ("RFLP") products for forensic and paternity testing.
The Orchid Diagnostics Laboratories in Stamford, USA are CLIA (Clinical
Laboratory Improvement Amendments) and ASHI accredited.
The directors of Tepnel believe that Orchid Diagnostics' principal advantages
are its experienced management team, its track record for quality and its high
level of developed technology, trademarks, patents and know how which represent
high barriers of entry to competitors trying to enter the market.
In the Tepnel directors' opinion, the acquisition of Orchid Diagnostics will
provide Tepnel with an operating base in the USA and a distribution channel
within continental Europe. The acquisition will provide Tepnel with
complementary product and service lines to add to its existing product line as
well as extending its cross selling opportunities.
The directors of Tepnel believe that certain potential cost synergies may be
available through the acquisition. These focus on the application of management
skills across both businesses, the possible supply of Tepnel DNA extraction kits
and instrumentation to Orchid Diagnostics and its customer base and the possible
integration of Orchid Diagnostics' Abingdon operation in the UK with Tepnel's
operations in Manchester or Scotland.
Details of the acquisition
The Company has entered into acquisition agreements with Orchid. to acquire the
business and net assets of Orchid Diagnostics. The consideration for the
acquisition is $4.3 million payable in cash, subject to an adjustment for any
difference in the net asset value of the completion balance sheet paid and to be
paid according to the following schedule:
i. *A payment of $1 million was made on 9 September 2003. This payment is non
refundable, save in certain specified circumstances, in the event that the
acquisition does not complete.
ii. *A further payment of $1 million was made on 30 October 2003, this payment
having been triggered on signing of the acquisition agreements. This payment
is also non refundable, save in certain specified circumstances, in the
event the acquisition does not complete.
iii. *The balance of $2.3 million (to be adjusted for net assets of Orchid
Diagnostics as at the date of completion) is to be paid upon completion of
the acquisition, which is scheduled to occur within 3 days following
admission of the placing shares to trading on AIM.
Orchid Diagnostics made a loss before taxation, in the six months to 30 June
2003, of $4,182,000, after an impairment of assets charge of $3,905,000 and had
a net asset value of $4,681,000 as at 30 June 2003.
The acquisition is conditional on, inter alia, Tepnel shareholder approval of
certain of the resolutions to be proposed at the AGM and admission of the
placing shares to trading on AIM.
Application has been made for the placing shares to be admitted to AIM and it is
expected that, subject to shareholders approval at the AGM, this should take
place on 25 November 2003.
Enquiries:
Tepnel Life Sciences plc 0161 946 2200
Ben Matzilevich / Gron Ffoulkes-Davies
Seymour Pierce Limited 020 7107 8000
Mark Percy / Brett Pollard
HCC De Facto 020 7496 3300
Richard Anderson / Yvonne Alexander
Copies of the circular regarding the above proposals are being sent to
shareholders today and will be available to the public until 24 December 2003 at
the offices of Seymour Pierce Limited, Bucklersbury House, 3 Queen Victoria
Street, London EC4N 8EL.
This information is provided by RNS
The company news service from the London Stock Exchange
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