Services

ML Laboratories Acquisitions and Fundraising

St Albans, UK, 16 June 2005

ML Laboratories PLC (LSE: MLB) (“ML”, “ML Laboratories” or the “Company”) is pleased to announce the proposed acquisition of Quadrant Technologies Ltd (“Quadrant”) for a total consideration of approximately £46.7 million (“the Acquisition”). In conjunction with the Acquisition, the Company plans to raise approximately £26 million in a Vendor Placing and a Placing and Open Offer which has been underwritten by Code Securities.

The Company also announces the acquisition of the outstanding minority of Innovata Biomed, its respiratory subsidiary, for a consideration of £1.85 million in cash and ML shares.

On the basis of these transactions, the “ML Laboratories” name no longer reflects the business of the Group and the Board of ML proposes that the name be changed to Innovata plc.

The Acquisitions, Vendor Placing, Placing and Open Offer and change of name to Innovata plc are all subject to the approval of ML Shareholders. A circular containing further information is being posted to shareholders today.

Reasons for the Quadrant Acquisition

  • The Directors are of the opinion that Quadrant represents an excellent strategic fit for the newly re-focused ML business. With Quadrant’s strength and experience in pulmonary delivery, the Enlarged Group will have a full complement of capabilities to tackle new products for respiratory disease and inhaled therapeutics.
  • The Quadrant Group is profitable with a royalty stream from a licence with Baxter Inc. and income generated from other pharmaceutical company collaborations. This will add to the Company’s financial stability.
  • Quadrant’s scientific staff and laboratory facilities will provide the Enlarged Group with the ability to take control of formulation development and will also provide synergies through savings in infrastructure.
  • The integration of the Quadrant management team into ML will provide greater strength in R&D and licensing.
  • Quadrant’s unit dose disposable and unit dose reusable devices will broaden the device options the Enlarged Group will be able to offer its clients.

Key Terms of the Quadrant Acquisition

  • 50:50 acquisition valuing Quadrant at £46.7 million (based on a closing share price of 20.625 pence) comprising cash consideration of approximately £19.5 million with the remainder in shares.
  • Vendors are subject to a 12 month lock-in in respect of their ML shares

Details of Vendor Placing and Placing and Open Offer

  • Vendor Placing and Placing and Open Offer of 137,499,998 new Ordinary Shares at the Issue Price of 19p to raise approximately £24 million (net of expenses)
  • Proceeds to be used to fund the cash consideration of the Acquisitions and to provide additional working capital for the Enlarged Group
  • Qualifying Shareholders can apply for Placing and Open Offer Shares on the basis of 1 Placing and Open Offer Share for every 5 existing Ordinary Shares held
  • Placing and Open Offer Shares have been conditionally placed with institutional investors subject to Qualifying Shareholders’ rights to take up their entitlements under the Open Offer
  • Vendor Placing Shares have been placed firm with institutional shareholders by Code Securities
  • Vendor Placing and Placing and Open Offer have been underwritten by Code Securities

Key Terms of the Innovata Biomed Acquisition

ML intends to acquire the outstanding 18.75 per cent minority of Innovata Biomed that it does not already own for a consideration of £1.85 million in cash and ML shares from Dr Nick Boyes, one of the former directors of the Company. The acquisition of this minority stake will allow the Company to have full control of Innovata Biomed, which will become a wholly-owned subsidiary of the Company.

Interim results for ML for the six months to 31 March 2005 were also announced today (see separate release).

Commenting on today’s announcement, Kieran Murphy, Chief Executive Officer of ML, said:
“The acquisition of Quadrant is a transforming transaction for ML with a compelling strategic logic. We believe that the combination of the two companies will enable us to participate in the significant upside potential of the fast growing market for inhaled therapies and respiratory disease. By combining the complementary skills and expertise of the two companies and building on the pharmaceutical collaborations already in place, we will create a powerful, integrated offering capable of delivering high quality revenue streams, early profitability and substantial growth potential.”

Contacts:

ML Laboratories plc    
Kieran Murphy, Chief Executive Officer      01727 837 341
Code Securities Limited    
Juliet Thompson / Richard Potts   020 7024 2000
Financial Dynamics    
David Yates / Julia Phillips   0207 831 3113

Code Securities Limited, which is regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for ML Laboratories PLC as sponsor, placing agent and underwriter in relation to the Vendor Placing, the Placing and Open Offer, the Quadrant Acquisition and the Innovata Acquisition. Code Securities Limited is not acting for, and will not be responsible to any person other than ML Laboratories plc for providing the protections afforded to customers of Code Securities Limited or for advising any other person on the contents of this document or any transaction or arrangement referred to herein.

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