(Sharecast News) - Molecular diagnostics company Yourgene Health announced the acquisition of AGX-DPNI on Tuesday, which it described as a newly-formed entity comprising the NIPT distribution business of AdGeniX - its current French distribution partner for the 'IONA' test.
The AIM-traded firm said the acquisition carried an initial cash consideration of €2.4m (?2m), and up to a maximum of €1.7m in cash earn-out payments based on sales growth performance criteria.
In addition, it said it has raised gross proceeds of ?2.5m via a direct subscription of 17,482,517 new ordinary shares at 14.3p each, with BGF Investment Management - an existing significant shareholder.
The net proceeds of the subscription would be used to satisfy the initial cash consideration, and for general working capital purposes.
Yourgene said cash-based earn-out payments were expected to be met using its future cash flows arising out of the acquisition.
The company said France was a key growth market for NIPT, with French government reimbursement agreed in early 2019 and 75% growth in Yourgene NIPT volume sales in 2019.
It explained that the acquisition timed ahead of further anticipated market growth and Yourgene's launch of the Illumina-based IONA test, adding that it estimated an immediate EBITDA uplift in first year of around ?0.5m from internalising distributor margins.
"The acquisition of our French distributor makes sense for Yourgene on a number of levels," said chief executive officer Lyn Rees.
"This has an immediate and positive impact on earnings and is an opportunity to fully capitalise on our rising NIPT sales in this growing market alongside our current direct sales of additional reproductive health products.
"This also allows us to gain maximum benefit from the launch of our Illumina-based IONA test and increases our ability to range-sell additional content into France and beyond."
Rees said while that would provide the company with its first direct commercial presence in Europe, and give it an EU-based presence post-Brexit, it would also open up access to high-growth French-speaking African and Middle Eastern markets not previously addressed by Yourgene.
"I would also like to thank BGF for their continued support for our ambitious growth strategy."
At 1527 GMT, shares in Yourgene Health were up 3.56% at 14.76p.
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