NEW YORK (GenomeWeb) – Liquid-based cytology diagnostics firm Novacyt today announced its intention to combine with Lab21 in a stock-for-stock transaction valued at approximately €40 million ($34.1 million).
Lab21 will become a subsidiary of Novacyt upon completion of the deal, and the combined company will be rebranded. Novacyt said the new firm's portfolio will include cancer and infectious disease diagnostic products and services, and the combined company will leverage Novacyt's R&D capacity as well as Lab21's commercial infrastructure, manufacturing capabilities, and extensive network of collaborative partnerships.
Its operations will be based in France, the UK, China, and Australia with distribution deals covering more than 100 countries in Europe, the Americas, and the Asia-Pacific region.
Novacyt shareholders are scheduled to vote on the proposed deal on June 13. The boards of both firms and Lab21 shareholders have already approved the deal.
Novacyt said that immediate revenues will result from the sale of its NovaPrep screening platform and Lab21's oncology and infectious disease business. An increased distribution network and new products will drive future revenues.
Lab21 will be responsible for the manufacture of some NovaPrep consumables "bringing a major revenue source for the Novacyt technology in house," as well as providing the company control of its supply chain and driving gross margin improvements, Novacyt said. Meanwhile, Lab21's market and distribution channels and partnering activities are anticipated to create new sources of business.
Under the terms of the deal, about 2.5 million shares of Paris-based Novacyt will be issued to Lab21 shareholders at an exchange ratio of .925 Novacyt shares for one Lab21 share. Upon completion of the deal, 54 percent of Novacyt's fully diluted share capital will be held by Novacyt shareholders and 46 percent will be held by current Lab21 shareholders. The new Novacyt shares will be traded on the New York Stock Exchange-Alternext.
"This transaction significantly improves the commercial outlook of both companies," Lab21 CEO Graham Mullis said in a statement. "Novacyt has developed an excellent cytology platform, which has been proven to be highly effective. This, combined with Lab21's global reach and existing partnerships will enable the newly combined business to reach new markets, and continue its commercial success."
Mullis will become CEO of the combined company, while Novacyt Chairman and CEO Eric Peltier will become the Chief Innovation Officer.
Lab21 is based in Cambridge, UK and provides diagnostic products and services. It also supports medical diagnostics and drug discovery. In the fall, it sold parts of its molecular business to Trinity Biotech, as PCR Insider reported at the time. The assets sold included those acquired when Lab21 purchased Myconostica in 2011. In early 2013, Lab21 sold its South Carolina laboratory operation to former Lab21 executives who then launched Selah Genomics, which was recently acquired by EKF Diagnostics.
Most recently, Lab21 announced an expansion of a distribution agreement with Quidel to include AnDiaTec's real-time PCR assays in the UK.