TIDMBQE
RNS Number : 2267H
Bioquell PLC
12 March 2015
12 March 2015
Bioquell PLC
("Bioquell" or the "Company")
Proposed disposal of TRaC Global Limited ("TRaC") for GBP44.5
million
Bioquell PLC (LSE symbol: BQE), the provider of specialist
microbiological control technologies to the international
Healthcare, Life Science and Defence markets today announces the
proposed disposal of its specialist testing services subsidiary,
TRaC, to Element Materials Technology Group Holdings Limited
("Element") for a cash consideration of GBP44.5 million (the
"Disposal").
Highlights
-- Total consideration of GBP44.5 million, payable in cash on
completion
-- For the year ended 31 December 2013, TRaC had revenues of
GBP16.8 million, operating profit of GBP3.4 million and gross
assets of GBP12.9 million
-- Gross cash proceeds from the Disposal equate to approximately
105 pence per Bioquell share, compared to the closing price per
Bioquell share of 82 pence on 11 March 2015
-- The Board of Bioquell expects that the majority of the net
cash proceeds arising from the Disposal will be returned to
Bioquell shareholders in due course
-- The Disposal to Element will allow TRaC to pursue further
growth opportunities within a larger testing, inspection and
certification ("TIC") business, while providing value to Bioquell
shareholders not currently reflected in Bioquell's market value
-- Following the Disposal, Bioquell will comprise a focussed
biological contamination control business ("Bio division") selling
into the international Life Sciences, Healthcare and Defence
markets. The Bio division had revenues of GBP27.9 million for the
year ended 31 December 2013
-- The Disposal constitutes a Class 1 transaction under the UK
Listing Rules and is therefore conditional upon the approval of
Bioquell shareholders. Directors of Bioquell, who together control
directly or indirectly approximately 33.4% of the issued share
capital of Bioquell, have given irrevocable undertakings to vote in
favour of the Disposal
-- The Disposal is expected to generate an exceptional profit
before expenses of approximately GBP35.4 million
Bioquell will be announcing its preliminary results for the year
ended 31 December, 2014 on Wednesday, 18 March, 2015
Commenting on the sale of TRaC, Nigel Keen, Chairman of Bioquell
said:
"The Board of Bioquell decided earlier this year to seek offers
for TRaC in order to simplify the Group and realise value for
shareholders. Over the last ten years we have grown TRaC into a
highly successful specialist testing business and I am delighted
that we are now able to demonstrate to shareholders the significant
value that we have created.
"It has become increasingly clear that the time is right to sell
TRaC. The improved prospects of our main Bio division - due to an
improved product mix and targeted cost savings - and the inherent
value of TRaC have not been properly reflected in the Bioquell
share price over recent months. The disposal will enable us to
focus on our core Bio-decontamination business and take advantage
of the growing opportunities in our core Healthcare, Life Sciences
and Defence markets."
Enquiries:
Bioquell PLC - 01264 835 900
Nigel Keen - Chairman
Nick Adams - Chief Executive
Michael Roller - Finance Director
Investec - 020 7597 4000
Keith Anderson
Daniel Adams
Citigate Dewe Rogerson - 020 7638 9571
Malcolm Robertson
This announcement has been issued by, and is the sole
responsibility of, Bioquell PLC.
Investec Bank plc, which is authorised by the Prudential
Regulation Authority ("PRA") and regulated by the FCA and the PRA,
is acting exclusively for Bioquell in relation to the Disposal.
Investec is not acting for any other person and Investec will not
be responsible to any person other than Bioquell for providing the
protections afforded to clients of Investec or for providing advice
in relation to the Disposal or in relation to the contents of or
any transaction or arrangement referred to in this
announcement.
Bioquell PLC ("Bioquell" or "the Company")
Proposed disposal of TRaC Global Limited ("TRaC")
The Board of Bioquell is pleased to announce the proposed
disposal of its subsidiary, TRaC, to Element Materials Technology
Group Holdings Limited ("Element") for a cash consideration of
GBP44.5 million (the "Disposal"). The Disposal recognises the
inherent value in the TRaC business for Bioquell shareholders not
currently reflected in the market value of Bioquell, and leaves the
Company focused on its biological contamination control business
selling into the international Life Sciences, Healthcare and
Defence markets.
Background to and reasons for the Disposal
After significant cost reductions over the last two years and
the completion of a substantial new product development programme,
coupled with improving market conditions in its core sectors, the
Board of Bioquell believes that the group's Bio division is well
placed to enjoy good organic growth with an innovative and modern
range of products and services.
In addition, the Board believes that TRaC has reached a size and
stage in its development where the company would be able to grow
faster if owned by a larger Testing, Inspection and Certification
("TIC") group.
Over recent years Bioquell has received a number of approaches
in relation to TRaC from trade and financial buyers. As the
improved prospects for the Bio Division and the inherent value of
TRaC have not been properly reflected in the Bioquell share price,
the Board of Bioquell decided earlier this year to seek offers for
TRaC in order to simplify the Group and realise value for Bioquell
shareholders. This process has culminated in the Disposal.
Further information on the transaction
Bioquell announces that it has entered into a binding share
purchase agreement with Element to sell the entire issued share
capital of TRaC Global Limited for GBP44.5 million.
Because of its size, the Disposal constitutes a Class 1
transaction under the UK Listing Rules and is therefore conditional
on the approval of Bioquell shareholders. A circular containing
further information on the disposal of TRaC as well as a notice
convening a general meeting to approve the Disposal will be sent to
Bioquell shareholders as soon as practicable.
Directors of Bioquell, who together control directly or
indirectly approximately 33.4 percent. of the issued share capital
of the Company, have signed irrevocable undertakings to vote in
favour of the resolution relating to the Disposal.
Financial effects of the Transaction and use of proceeds
Gross cash proceeds from the Disposal equate to approximately
105 pence per Bioquell share, compared to the closing price per
Bioquell share of 82 pence on 11 March 2015. The Board of Bioquell
envisages that the majority of the net cash proceeds from the sale
of TRaC will be returned to Bioquell shareholders in due course. It
is expected that the Disposal will have a dilutive effect on
underlying earnings per Bioquell share in the current financial
year ending 31 December 2015. This statement is not intended to be,
and should not be construed as, a profit forecast and should not be
interpreted to mean the underlying earnings per Bioquell share for
the current or future financial years will necessarily match, or be
greater or less than, the historical underlying earnings per
Bioquell share.
The Disposal is expected to generate an exceptional profit
before expenses of approximately GBP35.4 million.
Information on TRaC
TRaC is a specialist Testing, Regulatory and Compliance business
operating in the TIC sector with its headquarters in Malvern. The
majority of its testing activities relate to product development
and not manufactured output or 'end of line' testing.
TRaC's two core activities comprise: (i) EMC - electromagnetic
compatibility - testing; and (ii) environmental testing, which
largely relates to dynamic vibration. The two largest sectors TRaC
serves are aerospace and defence - although it has a broad range of
clients in a number of other sectors including telecoms, healthcare
and other industrials.
For the year ended 31 December 2013, TRaC had revenues of
GBP16.8 million, operating profit before tax of GBP3.4 million and
gross assets of GBP12.9 million. TRaC currently employs 193 people.
For the year ended 31 December 2014, TRaC had unaudited revenues of
GBP18.0 million.
Information on the profile and strategy of the Retained
Group
Bioquell's Bio division had revenues of GBP27.9 million in 2013.
(Bioquell announced in a pre-close statement on 15 January 2015
that the division had unaudited revenues of GBP27.3 million for the
year ended 31 December, 2014.) It develops, markets and sells
internationally a range of products and services for germ
eradication and containment. The division is a world leader in the
use of hydrogen peroxide vapour ("HPV") bio-decontamination
technology to eradicate micro-organisms from facilities, rooms and
equipment within the Life Sciences and Healthcare markets. It also
provides microbiological containment products, including the QUBE
aseptic work station and the Pod - which is used to provide single
patient rooms in hospitals with open-plan multi-bed units. The
division also provides specialist decontamination services and
consumables associated with its HPV technology as well as selling a
range of specialist chemical, biological, radiological and nuclear
("CBRN") filtration systems for the defence market.
Life Sciences
The Life Sciences market is international, highly regulated and
relatively fragmented. It comprises a range of disciplines
including research & development, clinical trials and
production which are carried out around the world in universities,
research organisations and corporations. Bioquell is principally
interested in the development and production of biologics where the
need for aseptic facilities is critical and there is strong
regulatory pressure to comply with the relevant standards.
Healthcare
Bioquell's Healthcare market principally relates to acute care
hospitals around the world which are facing clinical or financial
problems associated with antibiotic resistant bacteria and hospital
acquired infection ("HAI").
Defence
Recent unrest in the Middle East and Eastern Europe has
increased activity in a number of defence markets. Moreover, the
use of Sarin chemical warfare agent in Syria has helped underscore
the need for CBRN protection on military vehicles and
installations. These market trends have helped generate higher
levels of interest in our CBRN defence products over the last
couple of years.
Strategy
During 2014 the Bio division's cost base was reduced
substantially, particularly in relation to engineering resources.
Significant changes were also made to the management of Bioquell's
American and Asian subsidiaries. The benefit of these cost
reductions and management changes will be seen in the financial
performance of the Bio division in 2015.
The international Life Sciences and Healthcare markets are
continuing to change. The Board of Bioquell believes that these
changes will give rise to interesting opportunities for organic
growth for its Bio division, particularly in relation to the
increasing problems associated with antimicrobial resistance. The
substantial modifications made to the division's product portfolio,
including the imminent launch of a new product for the healthcare
sector, puts Bioquell in a strong position for 2015.
Information on Element
Element comprises a global network of laboratories with experts
specialising in materials testing and product qualification testing
for the Aerospace, Oil and Gas and the Transportation and
Industrial sectors. Element has more than 1,600 scientists,
engineers and technicians working in 45 facilities located
throughout the United States and Europe.
3i invested in Element in December 2010, acquiring a majority
stake in the business. Under 3i's ownership, Element has increased
its international reach across Europe and the US, where it is the
largest independent materials testing company. Since 2010, revenues
have increased from approximately US$100 million to in excess of
US$250 million. This expansion has been achieved through
consistently strong organic growth and by pursuing a successful
build-and-buy strategy through which eight acquisitions across
Europe and the US have been successfully completed.
Expected timetable to Completion
A circular, containing further details of the Disposal and the
resolution to approve the Disposal (the "Resolution"), the Board's
recommendation to vote in favour of the Resolution, and the notice
of general meeting, will be sent to Bioquell shareholders as soon
as practicable. Completion of the Disposal is expected to occur by
30 April 2015.
Forward-looking statements
Certain statements made in this announcement constitute
forward-looking statements. Forward-looking statements can be
identified by the use of words such as "may", "will", "should",
"predict", "assurance", "aim", "hope", "risk", "expect", "intend",
"estimate", "anticipate", "believe", "plan", "seek", "continue" or
other similar expressions that are predictive or indicative of
future events. All statements other than statements of historical
facts included in this announcement, including, without limitation,
those regarding the Group's expectations, intentions and beliefs
concerning, amongst other things, the Group's results of
operations, financial position, growth strategy, prospects,
dividend policy and the industries in which the Group operates, are
forward-looking statements. By their nature, such forward-looking
statements involve known and unknown risks, uncertainties and other
factors, many of which are outside the control of the Group and its
Directors, which may cause the actual results, performance,
achievements, cash flows, dividends of the Group or industry
results to be materially different from any future results,
performance or achievements expressed or implied by such forward
looking statements. As such, forward-looking statements are no
guarantee of future performance.
Such forward-looking statements are based on numerous
assumptions regarding the Group's present and future business
strategies and the environment in which the Group will operate in
the future. Among the important factors that could cause the
Group's actual results, performance or achievements to differ
materially from those in the forward-looking statements include,
among others, economic conditions in the relevant markets of the
world, market position of the Company or its subsidiaries,
earnings, financial position, cash flows, return on capital and
operating margins, political uncertainty, the actions of
competitors, activities by governmental authorities such as changes
in taxation or regulation, changing business or other market
conditions and general economic conditions and such other risk
factors as may be identified in the "Risk Factors" section of the
Circular. Forward-looking statements should, therefore, be
construed in light of such risk factors and undue reliance should
not be placed on forward-looking statements. These forward-looking
statements speak only as of the date of this announcement and are
not intended to give assurance as to future results. The Company
will update this announcement as required by applicable law,
including the City Code, Listing Rules, Prospectus Rules and/or the
Disclosure and Transparency Rules of the FCA, but otherwise
expressly disclaims any such obligation or undertaking to release
publicly any updates or revisions to any forward-looking statement
contained herein to reflect any change in Bioquell's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statement is based.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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