BARK.L Share News (BARK)

(Sharecast News) - Barkby Group announced on Tuesday that its Barkby Life Sciences division has signed exclusive, non-binding heads of terms to acquire the intellectual property of Cambridge Sound Technologies and associated parties, which is a privately-owned developer of advanced sleep technology products.

The AIM-traded firm said it would subsequently own 75.1% of the acquiring entity, with the remaining shares held by the two founders, who would remain involved in the business.

Cambridge Sound Technologies has created a patented product which uses audio technology to help the brain reset its natural sleeping cycle.

Barkby explained that, rather than just masking sleep issues, the product targeted the underlying principal causes of insomnia and poor sleep patterns that lead to a range of health problems, including poor mental health, heart disease, diabetes, stroke and weakening of the immune system.

In testing, it said 92% of participants reported a "significant improvement" to their sleep-related disorders with the average number of hours slept increasing 62% over a three-week period from the first night of testing to the last night.

Cambridge Sound Technologies was expected to begin commercial production of the product in the second quarter of 2020l, with first commercial deliveries expected in the third quarter.

The product had received significant interest from global retailers and distributors, Barkby said.

It said the consideration for the intellectual property of Cambridge Sound Technologies comprised initial cash consideration of £0.75m, and a deferred consideration payable in cash in a number of tranches over five years of up to £5.25m, conditional on certain performance criteria having been met.

As part of the acquisition, Barkby said it expected to invest a total of £1.5m of working capital into the acquiring vehicle.

It had an option to acquire the remaining 24.9% of the acquiring entity for £5m in cash or Barkby shares before 31 December 2021.

The board said it expected that the acquisition of Cambridge Sound Technologies would be earnings accretive in the 2021 financial year.

"Approximately one in three people globally suffer from insomnia and poor sleep patterns and the team at Cambridge Sound Technologies has developed a revolutionary product that tackles the underlying cause of poor sleep," said executive chairman Charles Dickson.

"Their focus on research and innovation has created a product that could potentially improve the lives of millions of people suffering from sleep related issues.

"Barkby is committed to constantly seeking out new opportunities and delivering value to our stakeholders and this acquisition is firmly aligned with our strategy."

The proposed acquisition remained subject to the completion of due diligence, documentation and compliance with all regulatory requirements.

Barkby said it expected that the acquisition would complete "shortly", but cautioned there was no guarantee as to the timing of it or whether it would proceed at all.

At 1440 GMT, shares in the Barkby Group were up 13.47% at 34.95p.