MediCult Acquires US-Based MidAtlantic Diagnostics to Further Strengthen ART
Presence
JYLLINGE, Denmark and MOUNT LAUREL, New Jersey, September 26
/PRNewswire-FirstCall/ -- MediCult a/s (OSE: MEC), a leader in Assisted
Reproductive Technologies (ART), today announced that it has entered into a
share purchase agreement to acquire MidAtlantic Diagnostics, Inc., a US
supplier of ART products, for DKK 78,6 million (USD 15,5 million).
MidAtlantic Diagnostics provides a complete range of disposables and
equipment to embryologists and andrologists, MediCult's core customer base.
MidAtlantic Diagnostics also has a strong pipeline of innovative,
predominantly disposable, products that fit well with MediCult's and will
help support the future growth of the combined company.
"For the last few years, an integral part of our corporate strategy has
been to further strengthen our ART franchise through acquisitions. To date,
the focus has predominantly been on ART media and micropipets following the
acquisition of Humagen in 2007. However, the acquisition of MidAtlantic
Diagnostics provides an additional dimension with its disposable products.
The combined company will be able to leverage product synergies and its
leadership position in the US market to its full potential, providing an
opportunity to scale up further," noted Jesper Funding Andersen, CEO of
MediCult. "MediCult as a whole will benefit from a great team of individuals
who will be joining the company."
"We have been very impressed by the way that MediCult has strategically
expanded on a global basis. We believe the combination of MidAtlantic
Diagnostics and MediCult provides multiple advantages not only on a product
level but also, and perhaps more importantly, with regards to our drive
towards providing infertile couples with the best possible chance of
conceiving," added Terry Fortino, President of MidAtlantic Diagnostics.
Terms of the Acquisition
MediCult has entered into a share purchase agreement with Terry Fortino,
President and majority shareholder of MidAtlantic Diagnostics, to purchase
the entire issued share capital for an up-front consideration of DKK 46
million in cash (USD 9 million) and deferred payments over a 3 year period of
DKK 30 million (USD 6 million) in cash and DKK 2,5 million (USD 0,5 million)
in MediCult shares. Of the upfront payment, DKK 40 million is being financed
through a 5 year loan agreement with Danske Bank at a variable interest rate
linked to CIBOR (Copenhagen InterBank Offered Rate). No agency fees have been
paid by MediCult to any third party in the arrangement of the acquisition or
the financing.
Based on preliminary estimates, MidAtlantic Diagnostics is expected to
contribute to MediCult group proforma full year revenues of approximately DKK
68 million (USD 13,5 million) in sales for 2008 and DKK 12,7 million (USD 2,5
million) in EBIT before any inventory charges. MediCult expects to incur
one-time legal and auditing fees of approximately DKK1 million (USD 0,2
million) at or before closing in connection with the transaction. The
effective transaction date will be September 30th 2008, thus providing a 4th
quarter effect of the MidAtlantic Diagnostics business on the MediCult
accounts (fully acknowledging standard IFRS practice of writing acquiree's
inventory up from cost to sales price at the time of take over).
Following the acquisition, MidAtlantic Diagnostics will become a
wholly-owned subsidiary of MediCult and remain at its current location in
Mount Laurel, New Jersey. The company resides within an 11,000 sq feet rented
building containing offices, warehouses and cleanroom production facilities.
Terry Fortino will hold the position of CEO of MidAtlantic Diagnostics and
Executive Vice President in the MediCult group after completion of the
transaction. Closing of the transaction is expected at the latest November
15, 2008.
Transaction Rationale
MidAtlantic Diagnostics is a strategic fit for MediCult on several levels:
- Providing MediCult strong additional exposure to the world's largest
IVF market with US sales driven by a dedicated 5 person sales team
- Complementing MediCult's current product portfolio within ART products
and thus enabling further potential for product bundling to its target
customers
- Accelerating international sales via shared distributors and Medicult
subsidiaries in key global markets
- Gaining greater operational efficiencies through sales and marketing
synergies
Updated FY Guidance
The impact on the FY Guidance of the acquisition of MidAtlantic
Diagnostic for Q4 2008 is estimated to be:
Previous Guidance as of August 21, 2008 New Guidance as of September
26, 2008
- Topline growth ~ 35% of which >10% - Topline growth > 45% of which
organic >10% organic
- GCM of 65-70% - GCM of 60-65%
- EBITA% 10-12% - EBITA% 8-10% (due to IFRS 3*)
- Cash flow from operations >= 10 - Cash flow from operations >=
million 10 million
*In the new guidance, the effect of accounting rule IFRS 3 on inventory
is estimated to be a maximum of DKK 4,5 million thus decreasing GCM and
EBITA. Excluding these charges EBITA% guidance for FY 2008 after the
acquisition would have been 10-12%.
About MediCult a/s
MediCult a/s is a leader in delivering leading innovative ART solutions
to the benefit of families. Through innovation and product advancements,
MediCult aims to help the number 1 dream of every infertile couple come true.
In 2007, it was estimated that a child is born every 8 minutes after
conception using a MediCult product. MediCult, which is located in Jyllinge,
Denmark and has subsidiaries in 8 countries, is listed on the Oslo Stock
Exchange (MEC). For further information, please visit http://www.medicult.com.
Forward Looking Statements
Certain statements in this press release contain forward-looking
statements that involve a number of risks and uncertainties. Our actual
results could differ materially from those results expressed in, or implied
by, these forward-looking statements. There can be no assurance that any of
the forward-looking statements identified in this press release will occur.
Conducting studies for investigational products are subject to risks and
uncertainties. There can be no assurance that planned studies can be
initiated, that planned or ongoing studies can be successfully concluded or
concluded in accordance with MediCult's anticipated schedule. These factors,
and other factors, including, but not limited to those described in
MediCult's most recent annual report could cause future results to differ
materially from the expectations expressed in this press release. The
forward-looking statements contained in this press release may become
outdated over time. MediCult does not assume any responsibility for updating
any forward-looking statements.
For more information, please contact:
MediCult a/s Halsin Partners
Jesper Funding Andersen, CEO Jeannett Hvidkjaer, CFO
Mike Sinclair, Director
Tel: +45-46-79-02-15 Tel: +45-46-79-02-12
Tel: +44(0)2070845955
Mobile: +45-40-73-09-63 Mobile: +45-27-80-02-91
Mobile: +44(0)7968022075
E-mail: jfa@medicult.com E-mail: jeh@medicult.com
E-mail: msinclair@halsin.com
SOURCE MediCult a/s
For more information, please contact: MediCult a/s, Jesper Funding Andersen,
CEO, Tel.: +45-46-79-02-15, Mobile: +45-40-73-09-63, E-mail: jfa@medicult.com;
Jeannett Hvidkjaer, CFO, Tel.: +45-46-79-02-12, Mobile : +45-27-80-02-91,
E-mail: jeh@medicult.com; Halsin Partners, Mike Sinclair, Director, Tel.:
+44(0)2070845955, Mobile : +44(0)7968022075, E-mail : msinclair@halsin.com
