Biotech company acquiring diagnostics distributor in deal worth up to £37m
Avacta, a drug company and diagnostics developer, has conditionally agreed to acquire Launch Diagnostics Holdings Ltd for an upfront cash consideration of £24m.
The deal, which includes an earn-out based on future business performance capped at £13m, is the first step in a M&A-led growth strategy by Wetherby-based Avacta for its diagnostics division.
Launch Diagnostics is a Kent-headquartered independent in vitro diagnostics distributor with around 70 staff. It provides immunodiagnostic and molecular test products, technical support and maintenance to healthcare providers.
The business generated £14.17m of non-COVID-19 related revenue in FY21, with total revenues including COVID-19 related products of £32.75m.
Dr Alastair Smith, chief executive officer of Avacta, said: “This acquisition will add an established distribution channel to Avacta with three decades of customer relationships and deep market knowledge to drive future product development, strategy and growth.
“It is the landmark first step in our ambitious M&A-led growth strategy for Avacta’s diagnostics division that has been a year in the making.
“This is a transformational moment for Avacta Diagnostics, adding a well-established route to market for existing and future in-house and acquired products in the UK and across several key European markets.”
John Twycross, managing director of Launch Diagnostics, added: “For over 30 years, the senior leadership team have built Launch Diagnostics to become one of the largest independent diagnostics distributors in the United Kingdom.
“As Launch Diagnostics becomes part of the diagnostics division of Avacta, there is a shared ambition to continue the growth of the group with a continuing focus on excellence and the ability to offer a wide range of trusted and efficient diagnostics solutions, both from existing and emerging technologies, to all our customers.”
Avacta notes it intends to run Launch Diagnostics as a separate business, retaining its brand.
In the UK, Launch Diagnostics will continue operating at its current site, though in the longer term, investment will be made to move to more modern premises. In Europe, operations will continue from the current location, with further investment in personnel and in a new facility in northern France.
Avacta says cash for the acquisition will come from the net proceeds of a financing by way of a convertible bond issue by Addition Finance (Jersey) Ltd in aggregate principal amount of £55m.
Alongside the convertible bond offering, funds are also being raised by way of a placing via an accelerated bookbuild to raise gross proceeds of about £5m and an open offer to certain existing shareholders of the company to raise up to around £2m.
