(Alliance News) - Integumen PLC on Friday announced it had agreed terms for the acquisition of Modern Water PLC in an all-share deal that values the London-based wastewater firm at around GBP21.3 million.
Shares in Integumen were down 12% at 3.56 pence in London in morning trading, giving it a market capitalisation of GBP39.8 million. Shares in Modern Water were up 19% at 3.32p for a GBP17.4 million market cap.
Integumen is seeking shareholder approval for a share consolidation whereby every 10 existing Integumen shares will be consolidated into 1 new Integumen share. Should the consolidation gain approval, then Modern Water shareholders will be entitled to 1 new Integumen share per 10 Modern Water shares.
If the consolidation is not approved, then Modern Water shareholders will be entitled to 1 existing Integumen share per 1 Modern Water share.
Based on the closing share price of Integumen's shares on Thursday, the offer values Modern Water's entire share capital at approximately GBP21.3 million.
The offer represents a value of around 4.05 pence per Modern Water share and 45% premium to Thursday's Modern Water closing share price of 2.80p.
Integumen is an artificial intelligence, clinical research, medical device and life science firm and has been working together with Modern Water since signing a production and logistics agreement on March 17. Under the agreement, Integumen is contracted to produce test kids for Modern Water.
"This has led to significant collaboration between the two companies which has provided invaluable insight into the Modern Water business. The board of Integumen believes that a merger of the two businesses would be a natural next step and there are synergies and opportunities across the combined businesses in the areas of science, IT, distribution channels, global reach, marketing and sales and management," explained Integumen.
Modern Water made a pretax loss of GBP1.6 million in 2019, widened from a GBP857,000 loss the prior year, on revenue that declined by 19% to GBP2.9 million from GBP3.6 million.
Given that Integumen's chief executive, Gerard Brandon, is also non-executive chair of Modern Water, he has not participated in setting the terms of the offer. Integumen's independent directors plan to unanimously recommend the deal, as have Modern Water's directors, who have irrevocably undertaken to do so.
Brandon commented: "I am pleased to announce this strategically important transaction for Integumen and Modern Water. I am confident that by combining our deep science in water management with Integumen's real-time AI technology, we will create a world class water solutions leader. Modern Water will join Integumen's family of integrated specialties underpinned by scientific expertise and advanced by AI. Together, we will pursue collaboration opportunities, both in aiding the fight against Covid-19 and beyond, and further expand the business in the future which we believe will significantly benefit our respective stakeholders."
Integumen will need shareholder approval for authority to issue consideration shares and so the deal is conditional on shareholder approval at a general meeting.
By Anna Farley; annafarley@alliancenews.com
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