Novacyt, an international specialist in clinical diagnostics, announced that its protein diagnostics division, Lab21 Products (Lab21), has unconditionally entered into an asset purchase agreement to acquire the Infectious Disease (ID) business from Omega Diagnostics Ltd, for an initial consideration of £1.8 million, up to £2.175 million in total, subject to the achievement of certain milestones (the “Acquisition”).

Highly complementary product range increases offering and global reach of Lab21, opening new sales channel opportunities, particularly on the African continent.  It  adds £2.49 million of annual sales and positive operational cash flows and the acquisition is expected to be immediately earnings accretive in the second-half of 2018. Cost synergies immediately anticipated as a result of leveraging existing commercial infrastructure within Novacyt, leading to an operating margin expansion for the ID business and revenue synergies targeted from 2019.
 
Additional manufacturing through the purchase of certain assets based in Axminster, UK providing a more competitive manufacturing position and increasing production capability.  

Infectious Disease Business: The ID business specialises in the manufacture of a range of diagnostic kits, in particular for syphilis and febrile antigens, as well as a range of latex serology tests for rheumatoid factor, C-reactive protein, antistreptolysin and systemic lupus erythematosus.

Lab21 will assume the commercial rights to five core registered brands, which comprise enzyme immunoassays microtitre plates, latex agglutination, fluorescence and rapid lateral flow tests. The brands include; Immutrep, Avitex, Micropath, Pathozyme and other smaller brands including Betatex, Avistrep, Avistaph and Virotect. In addition, Lab21 will be granted a time-limited licence for the use of the name Visitect for certain lateral flow tests excluding Omega Diagnostics’ Visitect CD4 assets, all of which will remain with Omega.

Unaudited results for twelve months to 31 March 2018 showed sales of the Omega ID business of £2.49 million and EBITDA profitability of £310,000.  Novacyt expects to see similar sales in the first twelve months of ownership and material cost synergies are anticipated immediately as a result of leveraging existing commercial and manufacturing infrastructure within Novacyt, leading to operating margin expansion.