A Diagnostics & Imaging Week
In a move designed to widen its reach in the dental imaging market, Schick Technologies (Long Island, New York) a maker of digital radiographic imaging systems and devices for the dental industry, reported Monday that it plans to purchase Sirona Dental Systems (Bensheim, Germany) in a reverse merger transaction that the companies said is worth nearly $1.46 billion.
The companies said that the merger, if completed, would immediately create a global player in dental technology with strong product lines in all of the major dental segments. Schick has a strong position in digital intra-oral imaging systems in North America, while Sirona is a prominent supplier of CEREC CAD/CAM restoration equipment, panoramic and intra-oral imaging systems, treatment centers and instruments worldwide.
“This transaction represents a significant strategic growth opportunity for our shareholders, partners and employees,” said Schick President and CEO Jeffrey Slovin during a conference call on the merger. “We will create a company with a strong global presence, an unrivaled breadth of products and excellence in R&D. Together with Sirona, we command an extraordinary level of brand recognition around the world.”
“We are excited about this merger and confident of the future growth of the combined company. Schick is a logical fit, complementing Sirona’s strengths, particularly in the U.S.,” added Jost Fischer, chairman, president and CEO of Sirona.
The transaction is structured as a stock-for-stock, tax-free exchange in which Schick will issue Sirona’s parent company 36.97 million new Schick shares in exchange for 100% of its economic interest in Sirona. Sirona’s owners will have an ownership interest in the combined company of 67%, with current Schick shareholders holding the remainder.
Schick shareholders also will receive a $2.50 per share cash dividend, which will be declared prior to closing. Based on a Sept. 23 Schick closing market price of $25.10, the deal places the total enterprise value of Sirona at $1.46 billion, including roughly $537 million in net debt.
The merged company will be renamed Sirona Dental Systems Inc., with corporate headquarters located at Sirona’s facilities in Bensheim, Germany, and U.S. headquarters at Schick’s facilities in Long Island, New York. Schick said it would apply promptly for the listing of its common stock on the Nasdaq National Market.
The merger already has been unanimously approved by both companies’ boards of directors and is expected to close sometime in 1Q06. It is subject to approval by Schick’s shareholders and will require clearance by U.S. and European regulatory agencies.
Voting agreements in support of the transaction already have been signed by shareholders holding about 37% of Schick’s issued and outstanding common shares, that company reported.
Sirona’s Fischer will become chairman, president and CEO of the combined company while Slovin will become executive vice president of the combined company and chief operating officer of U.S. operations. Sirona’s CFO, Simone Blank, will become executive vice president and CFO of the combined company. Sirona will hold seven seats on the combined company’s board, with Schick holding three seats.
The combined company will have 1,800 employees and, on a pro forma basis, for the 12 months ended June 30, had revenue of about $500 million worldwide, including more than $180 million in North America.
Following their combination, Slovin said the companies expect to achieve annual synergies of $5 million to $7 million within 12 to 24 months after the close. The business combination is expected to be accretive to Schick’s 2006 cash earnings per share.
UBS Investment Bank was financial advisor to Schick, while JP Morgan was financial advisor to Sirona.
Qiagen (Venlo, the Netherlands), a provider of enabling technologies and products for the separation, purification and handling of nucleic acids and proteins reported that it has entered into an agreement to purchase all outstanding shares of Shenzhen PG Biotech (Shenzhen, China), a developer of polymerase chain reaction (PCR)-based molecular diagnostic kits in China.
The company will acquire 100% of the outstanding shares of PG Biotech for about $14.5 million in cash. Some 52% of PG Biotech’s shares were held by state-owned institutions.
Qiagen said it believes the acquisition will expand its position as a leading provider of molecular diagnostics solutions to OEM partners and customers in the rapidly growing Asian markets.
Qiagen’s agreement to acquire PG Biotech was the result of a regulated auction process. Qiagen expects to close the transaction – currently pending Chinese government approval and other customary conditions – in the first half of 2006.
PG Biotech has about 120 employees, of whom a substantial number are employed in research and development.
“Our solutions enable nucleic acid testing to achieve unmatched performance and regulatory compliance and can be used on a number of leading detection instruments,” said Peer Schatz, Qiagen’s CEO. PG Biotech’s expertise in developing, manufacturing and marketing diagnostic assays has the potential to significantly expand [our] leadership position in providing molecular diagnostics solutions to our partners and customers in Asia.”
Life Therapeutics (Atlanta) reported that it has agreed to acquire privately held Pyramid Biological (Spring Grove, Illinois) for $13 million, plus assumption of $7 million in debt. An additional $5 million is subject to milestones.
Terms of the acquisition were first agreed upon in July.
Dr Hari Nair, managing director and CEO of Life Therapeutics, termed Pyramid “a leading supplier of plasma and biodiagnostic materials that boasts top-tier facilities and a well-trained, highly qualified work force. Combined with our current operations, the company will now have 13 plasma collection centers in eight states with nearly 450 employees.”
He added that the acquisition would allow the company to significantly increase its plasma collection capacity and expand its share of the global hyperimmune plasma and biodiagnostic markets. And he predicted that the purchase would result in a “significant increase” in Life Therapeutics’ FY06 sales and profits. Plus, he cited “substantial cost savings brought about by synergies with the integration of Pyramid. The merging of Life Sera [a unit of Life Therapeutics] and Pyramid’s operations will enable Life Sera to consummate a number of pending plasma supply contracts.”
Jeanette Porretta, president of Pyramid, said: “We are joining a firm with incredible forward momentum and a dynamic plan for an even more exciting future. Collectively, we will make a large impact on the market place in a market which is currently on the start of an upswing.”
Life Therapeutics has four divisions:
• Life Sera collects specialty plasma, including anti-D and hepatitis B, from a donor base of more than 5,000 in 13 U.S. centers. The plasma is then sold to blood fractionators who process it into hyperimmune therapeutic products.
• Life Gels offers precast gels for use in biological research and diagnostic testing, including a variety of electrophoresis systems. It also offers ultra-sensitive and rapid stains, molecular weight markers, and specially formulated buffers.
• Life Diagnostics provides diagnostic tests for blood-clotting disorders and source plasma products for blood-borne diseases. Its technologies include specialized blood coagulation tests to predict the risk of thrombosis and bleeding disorders. It also collects high-titer source plasma and serum used to make diagnostic kits.
• Life Manufacturing incorporates the Gradiflow technology with the manufacture of therapeutic and diagnostic products. Gradiflow is a process that simultaneously purifies proteins and removes all viral pathogens, and infectious prion proteins.
Life Therapeutics has 444 employees located in Australia and the U.S., with manufacturing operations in both countries and 13 plasma donor centers in eight states. It recently established its U.S. American Depositary Receipt Level I program, which enables trading in Life Therapeutics shares by U.S.-based investors, a step toward the company’s objective of achieving Nasdaq listing.
Pyramid owns five plasma collection centers: one in Van Nuys, California; two in San Diego; one in Colton, California; and one in Las Vegas, Nevada. The company reported 2004 revenues of about $20 million.
Porretta will be vice president of Life Sera and global director of source plasma; Neil Patrone will serve as vice president of diagnostic and therapeutic sales.
In other dealmaking news:
• Oxis International (Portland, Oregon), a developer of systems to diagnose diseases resulting from oxidative stress, said it will acquire “up to all” of the stock of BioCheck (also Portland) for $6 million in cash, subject to approval by BioCheck’s stockholders.
BioCheck will become a subsidiary of Oxis, and then will be able to offer a broadened portfolio of assay test kits used by the medical, pharmaceutical and research industries, Oxis said.
Oxis said completion of the deal is dependent on its ability to raise the capital necessary to purchase at least 51% of the outstanding BioCheck shares. It said it might also finance the purchase of the remaining outstanding BioCheck shares in future closings.
The company added that the price for any BioCheck shares purchased after closing will be increased by another 8% per year from the date of the initial closing through the date of such purchase. If Oxis has not purchased all of the outstanding shares within 12 months of the initial closing, BioCheck’s earnings will be used to re-purchase the remaining outstanding shares at additional closings.
BioCheck anticipates that it will be profitable in 2005 and that its revenues will exceed $4 million. The company has no outstanding borrowings or similar debt.
Steve Guillen, CEO of Oxis, said that the combination will result in creating a “worldwide leader in antigen and antibody test kits,” produce manufacturing and sales efficiencies and improve the efficiency in taking new products to market.
“We believe that the opportunities in the industries that our companies jointly serve are substantial, and by combining our knowledge and resources we expect to be able to lead a new generation of breakthrough assays for the worldwide biomedical, pharmaceutical and scientific research markets,” said BioCheck CEO Dr. John Chen.
Oxis said the immunoassay products and technologies of the two companies are complementary, with no directly overlapping product lines.
Oxis’ core business is diagnostic enzymes, inflammatory and monoclonal/polyclonal antibodies, and nitric oxide biomarkers relating to oxidative stress. BioCheck offers more than 45 enzyme immunoassays as well as research services focused on antigen/antibody products.
In addition, BioCheck has the commercialization rights for a promising new cancer biomarker associated with the Id gene, a potential mediator in tumor cell biology.