TIDMINS
RNS Number : 3130K
Instem plc
01 September 2021
Instem plc
("Instem" or "the Company" or "the Group")
Earnings Enhancing Acquisition of PDS Pathology Data Systems
Consolidates Non-Clinical Market; Further Extending Instem's
Leadership in Study Management and Regulatory SEND Submission
Support
Instem plc (AIM: INS), a leading provider of IT solutions to the
global life sciences market, announces the acquisition of life
sciences software company PDS Pathology Data Systems Ltd ("PDS")
for a total enterprise value of CHF 14.25m (c.GBP11.4m). The
consideration will be satisfied by a combination of cash and
ordinary shares in the Company (the "Acquisition").
Highlights
-- Further extends Instem's Study Management and SEND market share
-- Deepens Instem's relationships with some of its largest clients
-- Opportunity for competing product and service rationalisation to:
o Enhance client experience
o Increase operating margin
-- The Acquisition is expected to be immediately earnings enhancing
About PDS
Headquartered in Switzerland with offices in the United States
and Japan, PDS has been a direct competitor of Instem for over 25
years. PDS provides software for non-clinical study management and
software and outsourced services for regulatory submissions using
SEND (the Standard for the Exchange of Non-clinical Data). Seven of
the world's top ten pharmaceutical companies have relied on PDS, as
have leading contract research organisations, chemical companies,
universities and regulatory agencies.
PDS has a highly experienced and respected team with deep
product and market domain expertise in non-clinical study
management and the complex and continually evolving area of SEND
submissions.
In the year ended December 2020, PDS had unaudited, normalised
profits before tax of CHF 0.75m (c. GBP0.6m) on sales of CHF 6.5m
(c. GBP5.1m), of which CHF 2.3m (c. GBP1.8m) was recurring SaaS and
software maintenance revenue. As at 31 December 2020, PDS had net
liabilities of CHF 1.5m (c. GBP1.2m), including loans from its
shareholders of approximately CHF 3.0m (c. GBP2.4m). These loans
will be settled in full out of the proceeds received by PDS
shareholders.
Increased Opportunity
Instem will fully integrate approximately 35 additional PDS
staff into its operations and expects to retain all of the combined
workforce. The Acquisition will immediately increase Instem's
operational capacity, providing an opportunity to combine teams
operating in the significant United States, Swiss and Japanese
markets.
The Acquisition will enable Instem to concentrate investment on
a single line of SEND and preclinical study management products,
removing unnecessary duplication in the market. The combination of
technologies and highly experienced teams will enable the Company
to enhance the development and delivery of existing and new
solutions that provide higher value to its clients.
The Acquisition will also enable Instem to further strengthen
its relationship with joint clients - 70% of PDS' top 20 clients
are already clients of Instem. The Acquisition also broadens
Instem's customer base, with the addition of over 30 new clients
providing opportunities for the cross-selling of the wider Instem
product and service portfolio.
Terms of the Acquisition
The consideration comprises CHF 8.2m payable to the sellers of
PDS on completion of the Acquisition (the "Initial Consideration"),
CHF 3.0m of seller loan repayments, CHF 2.0m to satisfy other net
PDS liabilities and CHF 1.0m of deferred consideration (the
"Deferred Consideration").
The Initial Consideration is being satisfied by CHF 4.7m in cash
(c. GBP3.8m) and CHF 3.5m (c. GBP2.8m) in new ordinary shares of 10
pence each in the Company (the "Consideration Shares"), equating to
the issue of 359,157 shares at a deemed price of a 777 pence per
share. The cash payment, loan repayments and other net liabilities
payments are being funded from the Group's existing financial
resources.
The shareholders of PDS comprise the founder and a holding
company, PDS Group Holding AG, owned by one current and one former
executive of the company ("the Vendors"). Other than CEO Vicente
Nogués who is retiring, all of the PDS executives and employees
will continue to be employed by the Group following the
Acquisition. The Vendors will be subject to lock-in agreements,
precluding them from selling 179,579 of their Consideration Shares
prior to the 9-month anniversary of completion of the Acquisition
and the remaining 179,578 for a further 9 months.
The Deferred Consideration, to be satisfied in cash, comprises
CHF 1m payable to the Vendors on the 12-month anniversary of
completion.
Issue of Equity
Application has been made to the London Stock Exchange for the
admission to trading of the 359,157 Consideration Shares to AIM
("Admission"). It is expected that Admission will occur and that
dealings will commence at 8.00 a.m. on 7 September 2021. The
Consideration Shares will rank pari passu with the existing
ordinary shares in the Company.
Total Voting Rights
Following the issue and allotment of the above Consideration
Shares, the Company's issued share capital comprises 22,139,856
ordinary shares of 10 pence each. The Company does not hold any
ordinary shares in treasury, therefore the total number of voting
rights in the Company is 22,139,856.
The figure of 22,139,856 may be used by shareholders as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change of their
interest in, the Company under the FCA's Disclosure and
Transparency Rules.
Investor Presentation
Management will be hosting a presentation through the digital
platform Investor Meet Company later this month when it announces
results for the six months to 30 June 2021, providing an
opportunity to talk more about today's acquisition.
Investors can sign up for free and request to attend the
presentation via the following link
https://www.investormeetcompany.com/instem-plc/register-investor
Questions can be submitted pre-event via your Investor Meet
Company dashboard up until 9am the day before the meeting or at any
time during the live presentation.
Phil Reason, CEO of Instem, commented: "We are delighted to have
completed our third acquisition of 2021 which, along with the
Company's strong organic growth, ensures that Instem is positioned
as the foremost authority and driving force in generating,
analysing and leveraging data from discovery through late-stage
clinical trials.
"We have known the team at PDS for many years and are well aware
of their industry standing. We have spoken on several occasions
about a potential combination and are delighted that they have
agreed to join us at Instem, at a time when both of our businesses
and the life sciences market are thriving. We look forward to
integrating the business and benefiting from the scale and
increased reach that will further cement our leading market
position".
Vicente Nogués, CEO at PDS, commented: "This was a natural next
step in our quest to help clients do more and go further than ever
before. Our mission, values and overall company cultures are
aligned very well - which was the highest of priorities for
PDS.
"As part of Instem, our clients will now have access to the most
comprehensive range of solutions found in the market today backed
by excellent customer service, while our staff will enjoy
additional opportunities for professional growth. Together, we are
looking forward to advancing the ever-important mission of helping
clients to bring their life enhancing products to market
faster".
For further information, please contact:
Instem plc Via Walbrook
Phil Reason, CEO
Nigel Goldsmith, CFO
Singer Capital Markets (Nominated
Adviser & Broker) +44 (0) 20 7496 3000
Peter Steel
Alex Bond
Rachel Hayes
Walbrook Financial PR +44 (0) 20 7933 8780
Tom Cooper instem@walbrookpr.com
Nick Rome
Nicholas Johnson
About Instem
Instem is a leading provider of IT solutions & services to
the life sciences market delivering compelling solutions for Study
Management and Data Collection; Regulatory Solutions for
Submissions and Compliance; and Informatics-based Insight
Generation.
Instem solutions are in use by over 600 customers worldwide,
including all the largest 25 pharmaceutical companies, enabling
clients to bring life enhancing products to market faster. Instem's
portfolio of software solutions increases client productivity by
automating study-related processes while offering the unique
ability to generate new knowledge through the extraction and
harmonisation of actionable scientific information.
Instem products and services address aspects of the entire drug
development value chain, from discovery through to market launch.
Management estimate that over 50% of all drugs on the market have
been through some part of Instem's platform at some stage of their
development.
To learn more about Instem solutions and its mission, please
visit www.instem.com
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END
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