TIDMNCYT
RNS Number : 8303S
Novacyt S.A.
28 June 2018
Novacyt Announces Acquisition of Infectious Disease Business
from Omega Diagnostics
Accelerating profitability by expanding the Lab21 business
with complimentary products
Paris, France and Camberley, UK - 28th June 2018 - Novacyt
(EURONEXT GROWTH: ALNOV; AIM: NCYT), an international specialist in
clinical diagnostics, is pleased to announce that its protein
diagnostics division, Lab21 Products (Lab21), has unconditionally
entered into an asset purchase agreement to acquire the Infectious
Disease (ID) business from Omega Diagnostics Ltd (AIM: ODX, "Omega
Diagnostics"), for an initial consideration of GBP1.8 million, up
to GBP2.175 million in total, subject to the achievement of certain
milestones (the "Acquisition").
Highlights
-- Highly complementary product range increases offering and
global reach of Lab21, opening new sales channel opportunities,
particularly on the African continent
-- Adds GBP2.49 million of annual sales and positive operational cash flows
-- Acquisition is expected to be immediately earnings accretive in the second-half of 2018
-- Cost synergies immediately anticipated as a result of
leveraging existing commercial infrastructure within Novacyt,
leading to an operating margin expansion for the ID business
-- Revenue synergies targeted from 2019
-- Additional manufacturing through the purchase of certain
assets based in Axminster, UK providing a more competitive
manufacturing position and increasing production capability
-- Transaction multiple of 0.9x sales (to unaudited financial
year end 31 March 2018), pre-realisation of any expected
synergies
Infectious Disease Business
The ID business specialises in the manufacture of a range of
diagnostic kits, in particular for syphilis and febrile antigens,
as well as a range of latex serology tests for rheumatoid factor,
C-reactive protein, antistreptolysin and systemic lupus
erythematosus.
Lab21 will assume the commercial rights to five core registered
brands, which comprise enzyme immunoassays microtitre plates, latex
agglutination, fluorescence and rapid lateral flow tests. The
brands include; Immutrep, Avitex, Micropath, Pathozyme and other
smaller brands including Betatex, Avistrep, Avistaph and Virotect.
In addition, Lab21 will be granted a time-limited licence for the
use of the name Visitect for certain lateral flow tests excluding
Omega Diagnostics' Visitect CD4 assets, all of which will remain
with Omega.
Unaudited results for twelve months to 31 March 2018 showed
sales of the Omega ID business of GBP2.49 million and EBITDA
profitability of GBP310,000. Novacyt expects to see similar sales
in the first twelve months of ownership and material cost synergies
are anticipated immediately as a result of leveraging existing
commercial and manufacturing infrastructure within Novacyt, leading
to operating margin expansion. Revenue synergies are expected over
the subsequent twelve months.
Terms of the Agreement
Under the terms of the asset purchase agreement, the total
consideration, to be fully satisfied through cash consideration,
will be up to GBP2.175 million subject to performance,
comprising:
(i) GBP1.8 million upon completion,
(ii) GBP175,000 paid after twelve months upon completion of technology transfer and,
(iii) GBP200,000 paid upon the successful accreditation of the
Axminster, UK production facility to certain standards.
The full consideration of GBP2.175 million if paid represents a
modest multiple of 0.9x year sales.
The asset includes the customers, suppliers, trademarks,
contracts, stocks, technical files and know-how in order to
manufacture, distribute and market the ID assets. There will also
be some manufacturing equipment which will come with a
manufacturing facility, though fixed assets will be a small part of
the purchase.
Through TUPE, Novacyt expects to transfer two Omega employees
only at this time. No management or directors will come across with
the Acquisition.
Omega Diagnostics will assist Novacyt with the transfer of
manufacturing from its Alva, Scotland site which is expected to
take six months and will provide any technical assistance for up to
twelve months. All sales orders, despatch and invoicing of the ID
business unit will be undertaken by Novacyt from today.
Graham Mullis, Group CEO of Novacyt, added:
"I am delighted to agree terms to acquire the ID business
directly from Omega Diagnostics. We have been looking to expand our
Lab21 product range and the ID business is a perfect match with our
current portfolio. This acquisition is expected to deliver material
cost and growth synergies as we leverage the Novacyt infrastructure
and integration will start immediately after completion. We
continue to assess a deep pipeline of potential further
acquisitions and I look forward to updating the market as we
continue to deliver on our acquisitive growth objective."
Colin King, CEO Omega Diagnostics,
"In April we announced a strategic review of our business with a
focus on VISITECT(R) CD4, Allersys and Food Intolerance products.
The sale of the ID business is an important outcome of our review
and we are delighted to be working with Novacyt where we expect the
products and customers to be a good fit with the Lab21 Products
division."
The information communicated in this announcement is inside
information for the purposes of Article 7 of EU Regulation
596/2014.
- End -
Contacts
Novacyt SA
Graham Mullis, Chief Executive Officer
Anthony Dyer, Chief Financial Officer
+44 (0)1223 395472
Stifel Nicolaus Europe Limited (Nominated Advisor and Joint
Broker)
Jonathan Senior / Fred Walsh / Ben Maddison
+44 (0)20 7610 7600
WG Partners (Joint Broker)
Nigel Birks / Chris Lee / Claes Spång
+44 (0)203 705 9330
FTI Consulting (International)
Brett Pollard / Victoria Foster Mitchell
+44 (0)20 3727 1000
brett.pollard@fticonsulting.com /
victoria.fostermitchell@fticonsulting.com
FTI Consulting (France)
Arnaud de Cheffontaines / Astrid Villette
+33 (0)147 03 69 47 / +33 (0)147 03 69 51
arnaud.decheffontaines@fticonsulting.com /
astrid.villette@fticonsulting.com
About Lab21 Healthcare
Lab21 is a developer, manufacturer and distributor of a large
range of protein-based infectious disease in vitro diagnostic (IVD)
products. Lab21 operates in an estimated EUR11.7bn total
addressable market with a specific focus in microbiology, serology
and haematology diagnostic markets. During the year to 31 December
2017, Lab21 sales increased 16% (CER) to EUR6.7m versus 2016 driven
by the launch of multiple new products and entry into new
territories. In line with the Group's continued commitment to
commercial expansion, its new 15,000 square feet facility in
Camberley now accommodates the increased manufacturing of Lab21's
own products.
About Novacyt Group
The Novacyt Group is a rapidly growing, international
diagnostics group with a growing portfolio of cancer and infectious
disease products and services. Through its proprietary technology
platform, NOVAprep(R), and molecular platform, genesig(R), Novacyt
is able to provide an extensive range of oncology and infectious
disease diagnostic products across an extensive international
distributor network. The Group has diversified sales from
diagnostic reagents used in oncology, microbiology, haematology and
serology markets, and its global customers and partners include
major corporates.
For more information please refer to the website:
www.novacyt.com
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END
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