(Alliance News) - Animalcare Group PLC announced on Thursday its decision to sell equity in its joint venture, STEM Animal Health Inc, to Dechra Pharmaceuticals Ltd.
The York, UK-based animal health business reached an in principle agreement to sell its 33% equity stake in STEM Animal Health for a total cash payment of USD4.7 million.
STEM Animal Health was established in September 2020 as a joint venture between Animalcare and Canada-based biotechnology company Kane Biotech Inc to treat biofilm-related illnesses in animals.
The sale is dependent on the consent of more than 50% of Kane Biotech shareholders.
The sum of all the items in the agreement with Dechra Pharmaceuticals, a Northwich, Cheshire-based veterinary drugmaker, will reach a total monetary potential value of USD5.4 million.
Animalcare reported that the sale will yield "a positive return on investment", further strengthening the company's cash position following its disposal of Indenticare, a pet microchipping and pet owner-focused services company, last month.
The deal will also extend Animalcare's existing licence and distribution agreements with STEM, enabling it to access all European and UK channels.
Animalcare will maintain influence over new product development options in a new innovation team with Kane Biotech and Dechra Pharmaceuticals.
Chief executive officer of Animalcare Jenny Winter said: "This transaction offers value for Animalcare on several levels. Not only have we secured an attractive return on our equity investment in STEM that adds to our investment firepower, we have gained enhanced commercial licensing rights that grant us more options to reach pet owners in these key markets.
"Further into the future, I'm also excited about the potential to accelerate development of new biofilm-targeting products by combining the knowledge and resources of all three parties."
Animalcare shares rose 0.1% to 210.25 pence each in London on Thursday afternoon.
By Emily Parsons, Alliance News reporter
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Animalcare Grp (ANCR)