PHC.L Regulatory News (PHC)

4 Dec 2006 07:00

Plant Health Care PLC04 December 2006 4 December 2006 PLANT HEALTH CARE PLC ACQUISITION MYCONATE UPDATE Plant Health Care plc ("Plant Health Care" or "the Group"), one of the leadingproviders of natural products to the agriculture and landscaping industries,announces that it is to acquire the majority of the assets of NASDAQ listed,Eden Bioscience Corporation ("Eden") for a total consideration of $2.5 million(approximately £1.32 million) plus assumption of certain liabilities associatedwith these assets. The $2.5 million is payable in two tranches ($1.5 million oncompletion and $1.0 million on 1 January 2008). The initial consideration of$1.5 million will be paid in cash to be satisfied out of Plant Health Care'sexisting resources. The deferred consideration is to be satisfied by the issueby Plant Health Care, on completion, of a secured promissory note bearinginterest at a rate of 5% per annum. The principal assets to be acquired are intellectual property, licences, stock,plant and machinery. Eden will retain the retail Home and Garden business thatsells Harpin based products through both retail and Internet outlets. In theunaudited accounts of Eden to 30 September 2006 the inventory is valued at$2,691,050 and the plant and machinery is valued at $803,062. No value isattributed to the IP and licences. In addition, Plant Health Care is assumingthe liabilities associated with the licensing of the Harpin technology fromCornell University and the lease for an Eden facility. The Cornell payment isthe greater of 2% of sales or $200,000 per annum, although the payment is net ofPlant Health Care's field trial expenditure. Under the terms of the lease therental payment for the facility is $230,000 per annum. Plant Health Care expectsto rent out this facility during 2007 once the inventory being acquired has beensold or moved. The acquisition is expected to generate revenues of approximately $3.5 millionduring 2007 creating critical mass and a greater profile for the division. The assets being acquired from Eden include a fundamentally new and patentedtechnology based on naturally occurring proteins called 'Harpins' which activatenatural plant growth and stress-defence responses. Harpin is an ingredientwithin Plant Health Care's Pre-Tect, which extends the shelf life of lettuce andother leaf produce. Harpin is an EPA registered plant health regulator and formsthe basis for a number of Eden products addressing the agricultural market. The Harpin product range includes N-Hibit, which promotes resistance to soilborne pathogens and ProAct, which activates a plant's defence system andincreases growth and vigour, is an excellent complement to Plant Health Care'sMyconate product and is sold to the same customers. While Myconate is sold as aseed coating, farmers apply ProAct as a foliar spray several weeks after theplant has emerged from the ground. Plant Health Care believes the combination ofMyconate and the Harpin product line acquired from Eden will result insignificant yield increases. The Eden products being acquired have testingagreements currently in place with the same large partners as Myconate. ProActhas gained excellent acceptance in the cotton market as a foliar overspray andN-Hibit has shown good potential in the soybean and cotton market as a nematoderesistance product. The acquisition is subject to the approval of Eden' shareholders, among othercustomary closing conditions. The product range being acquired from Eden is distributed throughout NorthAmerica, Mexico and Europe. The acquisition significantly strengthens PlantHealth Care's presence in the US agricultural market, its principal focus. Myconate Update---------------Plant Health Care continues to hold discussions with several major agri-chemicaland seed companies regarding the commercialisation of Myconate. Myconate trialsconducted by a number of interested parties are continuing and further resultsare expected to be announced by early January 2007. Plant Health Care remainsconfident of signing its first licensing agreement with a major agri-chemicalcompany during 2007. Commenting on the acquisition, John Brady, CEO of Plant Health Care said: "Thisis an excellent and highly synergistic acquisition for Plant Health Care and animportant part of our strategy to build a significant agricultural division bothorganically and through acquisitions, extending throughout the US into Mexicoand across Europe." "We are acquiring the benefit of key technology developed at significant cost,which is complementary to our own product range." He added: "In terms of Myconate, we remain extremely excited by the potentialopportunities. Advanced discussions continue with some of the World's largestagri-chemical and seed companies and we hope to be able to announce majordevelopments in the due course." For further information: Plant Health Care plcJohn Brady, CEO Tel: 001 603 525 37024,5,6 December 2006 Tel: 020 7920 3150 Tavistock Communications Tel: 020 7920 3150Jeremy Carey This information is provided by RNS The company news service from the London Stock Exchange