Business & Finance
Bactiguard to acquire Vigilenz in cash and share deal
5 February 2020 -

Bactiguard Holding AB (Bactiguard) (STO:BACTIB), a medical device company engaged in the development and supply of infection protection solutions, announced on Tuesday that it has entered into an agreement to acquire Vigilenz, a Malaysian manufacturer and supplier of medical devices and consumables, primarily active in wound management and infection control.

Reportedly, Bactiguard and Vigilenz have been partners since 2015, when an agreement to develop Bactiguard-coated orthopaedic trauma implants was signed. These implants were CE-marked in late 2018, which paved the way for Bactiguard's global license agreement with Zimmer Biomet.

The total consideration of the acquisition consists of a cash payment of USD4.5m, payable at closing and subject to approval by the shareholders in Bactiguard at the AGM on 28 April 2020, as well as 241 512 new class B-shares in Bactiguard, equivalent to a value of USD2m. These new class B-shares will be subject to a lock-up period of 12 months, during which period the shares may not be sold.

With this acquisition, Bactiguard also assumes net debt of close to SEK12m. The cash portion of the acquisition will be financed through bank facilities provided by Skandinaviska Enskilda Banken (SEB), with a term of three years. At the same time, the term of Bactiguard's current bank facility with SEB will be extended and have the same tenor.

In 2019, Vigilenz reported preliminary, consolidated pro forma turnover of approximately SEK42m, EBITDA of approximately SEK6m and an EBITDA-margin of 14%.

Reportedly, Bactiguard's board of directors has approved this transaction and shareholders including Christian Kinch, Thomas von Koch, Jan Ståhlberg, The Fourth Swedish National Pension Fund (AP4) and Nordea Investment Funds, together representing approximately 66% of the capital and 84% of the votes in the company, have declared that they will support the issuance of new class B -shares at the AGM.

Also, the shareholders of Vigilenz, including the founder, chief executive and majority shareholder Professor Choudhury, have unanimously accepted Bactiguard's offer. Professor Choudhury has agreed to stay in the business and become a shareholder in Bactiguard.

According to the company, together with Vigilenz it will have a much stronger offer for infection control and will be able to access the market for advanced wound care, which has a global potential of over USD5bn. This transaction will also result in substantial synergies both in revenues and cost, by pooling both the company's distribution networks, product development teams, staff functions and production facilities.

As a result of the acquisition, joint revenues are expected to grow faster than on a stand-alone basis, as the product portfolios are complementary and can be offered throughout both companies' footprint. In a three to five year perspective, Bactiguard also expects cost synergies of SEK5m to SEK10m.

Closing of the acquisition and payment of the cash portion of the purchase price shall take place 10 business days after fulfilment of condition precedents of Bactiguard having received approval from SEB with firm and unconditional commitment regarding the financing of the cash portion of the purchase price and also that Vigilenz's bank approves the change of control of Vigilenz.

It is expected that these conditions precedent will be fulfilled no later than 14 February 2020 and closing will occur before the end of February 2020.