Novacyt (EURONEXT GROWTH: ALNOV;AIM: NCYT), an international specialist in clinical diagnostics,is pleased to announce that its protein diagnostics division, Lab21 Products(Lab21), hasun conditionally 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 £1.8million, up to £2.175million 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 £2.49 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 product ion 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 fivecore registered brands,which comprise enzyme immunoassays micro titre plates, latex agglutination, fluorescence and rapid lateral flow tests.The brands include; Immutrep, Avitex, Micropath, Pathozymeand other smaller brands including Betatex, Avistrep, Avistaphand 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 CD4assets, all of which will remain with Omega.Unaudited results fortwelvemonths to 31 March 2018 showed sales of the OmegaID business of£2.49 million and EBITDA profitability of£310,000.
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 with in Novacyt, leading to operating margin expansion. Revenue synergies are expected over the subsequent twelve months
