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BioProgress acquires the OTC trading assets of the Melbrosin Group of companies
28 June 2007
BioProgress plc ('BioProgress' or the 'Company') acquires the OTC trading assets of the Melbrosin Group of companies ('Melbrosin')London, UK, 28 June 2007: BioProgress (AIM: BPRG), the specialty pharma and healthcare company, is pleased to announce that it has entered into an agreement to acquire the Over the Counter (‘OTC") intellectual property (‘IP’) and trading assets of the Melmed Group, the holding company for Melbrosin, for a consideration of up to €35m (£23.6m). In addition, the Company announces that it has raised approximately £4.9m by way of a placing for cash. The Company also announces its intention to re-brand and change the name of the Company from BioProgress to Meldex Group plc later in the year. Highlights:
MelbrosinBioProgress is acquiring Melbrosin, comprising businesses in Austria, Switzerland and Germany, together with own and licensed products, intellectual property and distribution agreements covering territories including South America, Eastern Europe and Canada. Melbrosin’s focus is upon the development and distribution of highly valued and differentiated OTC products based upon substances of natural and plant origin. Melbrosin’s range include products in categories covering slimming maintenance, women’s health, men’s health and general well being.Melbrosin has 52 employees predominantly performing sales and marketing functions in Germany, Italy, England and Austria with further throughput into the emerging markets of Eastern Europe. Sales for 2006 were €13.6m (£9.2m). Sales for the four months to April 2007 were €7.3m (£4.9m). Melbrosin complements BioProgress’s distribution and infrastructure in its key European market, in particular, giving the enlarged Company critical mass in Germany, the largest EU market in OTC health care sales. The Company’s strategy has been to add to its sales capability to benefit from the market demand for both its prescription only as well as OTC product launches. The Company has experienced higher than expected demand for its OTC products highlighting the need to add rapidly to its geographical infrastructure. As a consequence of working with Melbrosin on the co-promotion of Slimthru®, it became clear that both companies share a number of common approaches, namely using natural non-animal derived products, operating in expanding high value, high growth market niches and possessing unique patented IP. The consideration for the acquisition of Melbrosin is up to a maximum of €35m (£23.6m). This comprises €13.6m (£9.2m) as an initial payment to be satisfied by the issue of 15,069,631 new ordinary shares of 1p each of BioProgress (these shares are subject to a lock in agreement with the Company until December 2008). The second and final payment comprises an earnout dependent upon 2007 revenues and gross profits payable by a further issue of ordinary shares in April 2008 (these shares will be subject to a lock in agreement until April 2009). Upon the expiry of the lock in agreements the equity issued will be subject to orderly market agreements with the Company’s nominated brokers, Nomura Code Securities Limited. PlacingThe Company also announces a placing of 8,838,545 new ordinary shares of 1p each (the ‘Placing’) with new and existing institutional investors (the ‘New Ordinary Shares’), representing approximately 5.3% of the current issued share capital of the Company at 55p per New Ordinary Share, under an existing disapplication of pre-emption rights taken under the provisions of s.95 of the Companies Act 1985. The Placing has been underwritten by Nomura Code Securities Limited. The proceeds of the Placing will be used to accelerate the launch programme of both Melbrosin’s as well as the Company’s OTC products. Melbrosin and BioProgress have experienced high demand for their ranges and believe it is in shareholders’ interests to increase the marketing investment as the market segments in which both businesses operate are exhibiting high growth. An application has been made for the 15,069,631 new ordinary shares being issued as consideration for Melbrosin to be admitted to the AIM market of the London Stock Exchange. It is expected that dealings in these shares will commence on Friday 29 June 2007. An application will be made for the 8,838,545 new ordinary shares being issued pursuant to the Placing to be admitted to the AIM market of the London Stock Exchange. It is expected that dealings in these shares will commence on Thursday 5 July 2007. All of the new ordinary shares being issued, either as consideration or pursuant to the Placing, will rank pari passu with the existing issued ordinary shares of the Company.Change of NameThe Company is proposing to re-brand and change its name to Meldex Group plc. The Company will send further details to shareholders in due course.Richard Trevillion, Chief Executive Officer, BioProgress said: "This transaction is very exciting for the Company, and dramatically enhances the financial profile of the Group. Joining Melbrosin with the BioProgress Group gives both companies critical mass in high value and growth niche markets. The enhanced Company has leading brands, a valuable distribution network, a rich pipeline and robust IP which creates both barriers to entry and superior product performance.” Klaus Kuhne and Helmut Kerschbaumer, joint Managing Directors of Melbrosin, the new OTC division of BioProgress said: “Working with BioProgress over the past few months demonstrated how both companies can significantly grow value by leveraging core skills and assets together. We have complementary geographical strengths and business philosophy and strategy which should enable accelerated and profitable growth.” For further information:
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