BiolinScientific to aquire Farfield
Gothenburg, Sweden, March 1, 2010
Biolinscientific to acquire farfield
BiolinScientific has agreed to acquire analytical instruments provider Farfield. The acquisition of Farfield complements BiolinScientific’s product portfolio and provides new application opportunities in bioscience. Combining Farfield with BiolinScientific resources in international sales and distribution is expected to lead to substantially increased sales of products. The acquisition is expected to contribute to BiolinScientific earnings and cash flow from 2011. The purchase price for the acquisition corresponds to one times the acquired net sales and is paid in convertible notes in BiolinScientific.
BiolinScientific AB (publ) (“BiolinScientific”) of Sweden has agreed to acquire all outstanding shares in Farfield Group Ltd (“Farfield”) of England. The acquisition transaction is scheduled to be completed on April 1, 2010, from which date Farfield will be consolidated in the BiolinScientific group. The selling parties are Farfield’s management and a limited number of financial investors.
”Farfield has a competent organization with good products based on a unique technology. Farfield products are a logical complement to our product portfolio. We think that Farfield products should be of value and interest to a significant proportion of our customer base. Farfield’s technology also provides us with strategically important application opportunities in the field of biochemical research. We expect to be able to increase sales of Farfield products substantially, integrating it with our own international sales and distribution organization.” says Fredrik Lindgren, CEO of BiolinScientific.
“Over the past ten years, Farfield’s technology has become recognized as an invaluable research tool for biophysics with an installed base in 19 countries. We believe there is significant further potential still to be explored particularly in the fields of protein research and are delighted to become a product company within the BiolinScientific group. This will allow us to focus on the long term development of our technology and applications” says Dr Gerry Ronan, Managing Director of Farfield.
Products and Technology
Farfield‘s products are analytical instrument systems based on its patented technology, Dual Polarization Interferometry (DPI). DPI is a highly sensitive technique to detect and monitor molecular changes occurring on a surface. Application scope for DPI ranges from advanced material science to biophysics and biochemistry. Examples of applications are cell membrane models, conformational change of proteins, biocompatibility studies and structural properties of macromolecules. The list of scientific publications based on DPI recently exceeded 100. Farfield’s product range consists of several analytical instrument models and consumable sensors.
Company and Organization
Farfield has 11 employees located in Crewe, England and Pittsburgh, USA. The internal organization is focused on technical development, application science, sourcing, marketing and sales. Manufacture of products is outsourced to an external supplier. International sales and distribution is primarily handled by the internal organization, in collaboration with distribution partners in a few markets. The customer base consists of scientists and researchers at universities, research institutions and global corporations throughout the world. Farfield was founded as a company in 1998 and launched its first product in 2003. During Farfield’s last fiscal year, ending March 31, 2009, Farfield generated net sales of GBP 1.6 million (SKr 17.5 million) and EBITDA earnings of GBP 0.2 million (SKr 2.2 million).
Farfield’s management and employees are staying on after the acquisition to form a separate product organization within the BiolinScientific group. In the short-term, BiolinScientific sales organisation will take over sales and distribution of Farfield products in the US, UK and Nordic markets. During 2010, BiolinScientific will also secure the distribution of Farfield products in a number of international markets where Farfield is currently lacking representation. In other markets, BiolinScientific will continue the co-operation with Farfield’s current distribution partners. During 2010, manufacturing of Farfield analytical instruments will be in-sourced to BiolinScientific production in Helsinki, Finland.
Through the integration of Farfield into the BiolinScientific sales and distribution organization, BiolinScientific expects to achieve substantially increased sales of Farfield products from 2011. The in-sourcing of the manufacture of Farfield products, is expected to lead to decreased cost of goods towards the end of 2010. Farfield’s new position as a product organization focused on marketing and science is expected to facilitate a reduction of operating expenses from 2011.
The purchase price consists of a fixed price and an additional price, designed to correspond to one times the net sales of the acquired company. Payment is made by issue of convertible debentures corresponding to shares in BiolinScientific, with a conversion price equivalent the average BiolinScientific share price during 10 days prior to their issue. The convertible debentures are partially convertible after 6 months from issue, and partially after 12 months, if not settled by cash payment. The fixed price payable upon completion is GBP 1.3 million (SKr 14.3 million), corresponding to appr 1.4 million BiolinScientific shares. The additional price payable on March 31, 2011, is earned in relation to the increase in net sales in the acquired company during the year following completion, and is capped to GBP 1.05 million (SKr 11,3 million). The maximum purchase price, used for accounting purposes, is GBP 2.35 million (SKr 25.5 million), estimated to correspond to 2.5 million shares. The total purchase price would lead to an estimated maximum dilution of 10 % for BiolinScientific shareholders, unless the convertible debentures are settled by cash payment.
The acquisition transaction is expected to lead to cash investment of SKr 5 million in working capital facility for the acquired company. The acquisition transaction is expected to lead to an increase in total assets of SKr 35 million, mainly acquisition goodwill, and will to lead to a decrease in the equity-to-assets ratio. For 2010, the effect on operating cash flow, EBITDA and earnings per share is expected to be limited. From 2011, the acquisition is expected to give a substantial positive contribution to cash flow, EBITDA and earnings per share.
For further information, please contact Fredrik Lindgren, CEO of BiolinScientific.
For more information about Farfield, www.farfield-group.com.
CEO of BiolinScientific AB (publ)
+46 705-61 61 77
|COMPANY INFORMATION |
BiolinScientific AB (publ)
SE-426 77 Västra Frölunda
Telephone: +46 31 769 7690
Fax: +46 31 69 80 40
Company number: 556249-4293
Nasdaq OMX Small Cap in Sweden
Stock ticker: BLIN
BIOLINSCIENTIFIC IN BRIEF
BiolinScientific is an analytical instruments provider focused on the nano-scale study of interfaces within materials research and bioscience. Our customers are scientists and researchers in academic research, research institutes and the industrial sector.