A Medical Device Daily

MediCult (Denmark,Sweden) a developer of assisted reproductive technologies (ART), reported that it has entered into a share purchase agreement to acquire MidAtlantic Diagnostics (Mount Laurel, New Jersey) a U.S. supplier of ART products, for $15.5 million.

MidAtlantic Diagnostics provides a complete range of disposables and equipment to embryologists and andrologists, MediCult's core customer base. MidAtlantic Diagnostics also has a strong pipeline of innovative, predominantly disposable, products that fit well with MediCult's and will help support the future growth of the combined company.

MediCult said that it has entered into a share purchase agreement with Terry Fortino, president and majority shareholder of MidAtlantic Diagnostics, to purchase the entire issued share capital for an up-front consideration of $9 million and deferred payments over a 3 year period of $6 million in cash and $500,000 in MediCult shares. Of the upfront payment, DKK 40 million is being financed through a five year loan agreement with Danske Bank at a variable interest rate linked to CIBOR (Copenhagen InterBank Offered Rate). No agency fees have been paid by MediCult to any third party in the arrangement of the acquisition or the financing.

"For the last few years, an integral part of our corporate strategy has been to further strengthen our ART franchise through acquisitions. To date, the focus has predominantly been on ART media and micropipets following the acquisition of Humagen in 2007. However, the acquisition of MidAtlantic Diagnostics provides an additional dimension with its disposable products. The combined company will be able to leverage product synergies and its leadership position in the U.S. market to its full potential, providing an opportunity to scale up further," noted Jesper Funding Andersen, CEO of MediCult. "MediCult as a whole will benefit from a great team of individuals who will be joining the company."

"We have been very impressed by the way that MediCult has strategically expanded on a global basis. We believe the combination of MidAtlantic Diagnostics and MediCult provides multiple advantages not only on a product level but also, and perhaps more importantly, with regards to our drive towards providing infertile couples with the best possible chance of conceiving," added Terry Fortino, president of MidAtlantic Diagnostics.

Based on preliminary estimates, MidAtlantic Diagnostics is expected to contribute to MediCult group proforma full year revenues of approximately DKK 68 million ($13.5 million) in sales for 2008 and DKK $2.5 million in EBIT before any inventory charges. MediCult expects to incur one-time legal and auditing fees of about $0.2 million) at or before closing in connection with the transaction. The effective transaction date will be September 30th 2008, thus providing a 4th quarter effect of the MidAtlantic Diagnostics business on the MediCult accounts (fully acknowledging standard IFRS practice of writing acquiree's inventory up from cost to sales price at the time of take over).

Following the acquisition, MidAtlantic Diagnostics will become a wholly-owned subsidiary of MediCult and remain at its current location in Mount Laurel, New Jersey. Fortino will hold the position of CEO of MidAtlantic Diagnostics and Executive Vice President in the MediCult group after completion of the transaction.

Closing of the transaction is expected at the latest Nov. 15, 2008.