| Mon 14 Dec 2009, 9:23 | | MYD - Myriad - Acquisition Of Litha Healthcare Holdings (Litha or The |
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MYD
MYD
MYD - Myriad - Acquisition Of Litha Healthcare Holdings ("Litha" or "The
Group"), Underwritten Rights Offer and Renewal of Cautionary
Myriad Medical Holdings Limited
Registration no. 2006/006371/06
Share Code: MYD & ISIN Code: ZAE000085825
("Myriad" or "the company")
ACQUISITION OF LITHA HEALTHCARE HOLDINGS ("LITHA" OR "THE GROUP"), UNDERWRITTEN
RIGHTS OFFER AND RENEWAL OF CAUTIONARY
INTRODUCTION
Myriad shareholders are referred to the cautionary announcements published by
the company and are advised that Myriad has concluded agreements to acquire 51%
of the issued share capital of Litha for a purchase consideration of
approximately R114 000 000 (the "transaction"). As part of the transaction, put
and call options have been concluded for the acquisition by Myriad of the
balance of the shares in Litha.
RATIONALE FOR THE TRANSACTION
In the circular dated 7 October 2009, Blackstar Group PLC (one of Myriad`s
anchor shareholders and original funders) committed to playing an active role in
the roll out of Myriad`s acquisition strategy through the appointment of certain
of its employees onto the board of Myriad. The acquisition of Litha in terms of
the transaction forms the first step in this acquisition strategy.
Formed in 1992, Litha is a diversified healthcare group focussing on
biotechnology, pharmaceuticals and consumables with an investment arm holding
strategic interests in healthcare businesses. Litha has centralised systems
providing shared services across the group and an experienced and highly
regarded executive team. Litha has strong BEE credentials both at a shareholding
and operational level.
The group imports and distributes paediatric and adult vaccines under agency for
several major international pharmaceutical companies (including Sanofi Pasteur,
Pfizer, Novartis Vaccines, Heber Biotech, Statens Serum Institut and GSK)and is
the exclusive supplier of paediatric vaccines to the South African Government
through The Biovac Institute (a Public Private Partnership) controlled by Litha.
The Biovac Institute is in the process of developing the capacity to manufacture
vaccines under license in the near future. Distribution for the group is handled
internally through Litha Medical Logistics (a specialised cold chain
distribution and logistics business. Certain minority interests that are deemed
to be non-core will be exited in an appropriate manner.
Pharmaceuticals and generics will be a major focus of Litha going forward and in
this regard they have secured South African licenses for a number of new
products that are currently at the Medical Control Council awaiting
registration. In addition Litha has an option to acquire 74% of the shares
(being the shares that they do not already own) in Pharmafrica (Pty) Ltd, a
branded pharmaceutical business. In all likelihood this option will be
exercised in the near future, further strengthening Litha`s pharmaceuticals and
generics business.
The transaction diversifies Myriad`s healthcare offering into three medical
business lines - biotechnology (vaccines), pharmaceuticals and devices - with
high barriers to entry in the vaccines, pharmaceuticals and cold chain
distribution businesses. Litha`s executive team provides Myriad with strong
operational and industry experience and the transaction significantly increases
the scale of the listed group, providing scope to unlock savings by centralising
functions where this is operationally and commercially justifiable.
Following the implementation of the transaction, Selwyn Kahanovitz and Martin
Kahanovitz will take over as CEO and CFO of Myriad respectively. Dr Morena
Makhoana will become the deputy CEO of the enlarged group. Selwyn will however
still remain at the helm of The Biovac Institute as CEO. He brings more than 28
years of experience in the medical and pharmaceutical industry as an
entrepreneur. As Litha`s CFO, Martin brings 13 years financial experience to the
Group. Morena has been an executive of Litha and The Biovac Institute and has
more than 8 years experience in the healthcare industry. The operational
management of Myriad`s existing businesses will be unchanged by the transaction
and Barry Budler (Myriad`s current financial director) will be responsible for
the group`s devices and medical consumables business.
Subject to the necessary JSE and shareholder approvals, Myriad intends changing
its name to Litha Healthcare Group and move its listing from Altx to the main
board of the JSE after the implementation of the transaction.
TERMS OF THE TRANSACTION
Subject to the conditions set out below, Myriad has agreed to:
- subscribe for approximately 11% of the shares in Litha for a subscription
price of R25 433 726, payable in cash on the implementation of the
transaction, the proceeds of which will be used to redeem all preference
share funding of Litha; and
- acquire 40% of the shares in Litha from the existing Litha shareholders for
a purchase price of R88 806 274.65, R54 566 273 of which will be paid in
cash on the implementation of the transaction and R34 240 000 of which will
be settled by the issue of 42 800 001 Myriad shares at an issue price of 80
cents per share.
The transaction will be effective on the date of its implementation and remains
conditional on:
- the receipt of all requisite regulatory approvals (including the approval
of the JSE and the South African Competition Commission approvals) and
Myriad shareholder approvals; and
- the implementation by Myriad of an underwritten rights offer to fund the
payment of the cash portion of the purchase price at a price of 80 cents
per share,
by 31 March 2010.
As part of the transaction:
- Myriad has a call option to acquire the balance of the shares in Litha by
written notice to the remaining shareholders at any time in the 12 months
after the finalisation of Litha`s financial results for the 12 months
ending 31 December 2010;
- the remaining Litha shareholders have a put option to require Myriad to
acquire the balance of the shares in Litha by written notice to Myriad at
any time in the 60 days after the finalisation of Litha`s financial results
for the 12 months ending 31 December 2011.
In the case of the put and call options the option price is equivalent to 7.2x
the average profit after tax earned by Litha for the two financial years
preceding the date on which the option is exercised.
Unless otherwise agreed by the parties, 70% of the option price will be paid in
cash and the balance will be paid by the issue of Myriad shares at a price
equivalent to the volume weighted average price at which Myriad shares trade on
the JSE for the 30 trading days preceding the date of exercise of the option.
UNDERWRITTEN RIGHTS OFFER
The cash portion of the purchase price payable will be funded by way of an
underwritten rights offer to raise R100 million at a rights offer price of 80
cents per share.
In terms of the rights offer, Myriad shareholders will be offered 79, 16 new
Myriad shares ("rights offer shares") for every 100 shares in Myriad owned by
them. Blackstar Group Plc has agreed to underwrite the entire R100 million of
the rights offer.
An announcement detailing the salient dates of the rights offer will be released
on SENS and published in the press in due course.
FINANCIAL EFFECTS AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
The financial effects of the transaction and the rights offer are still in the
process of being finalised, accordingly Myriad shareholders are advised to
continue to exercise caution when dealing in their shares until such time as a
further announcement is released.
Johannesburg
14 December 2009
Designated advisor and legal and Transaction arranger
corporate advisor to Myriad and underwriter
Java Capital (Proprietary) Limited Blackstar
Legal advisor to Litha
Litmus Corporate Law Solutions (Proprietary) Limited
Date: 14/12/2009 09:23:01 Produced by the JSE SENS Department.
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