Revolymer PLC, the AIM-listed specialty chemicals company, on Monday said it agreed to buy Itaconix Corp, a privately owned polymer company based in New Hampshire, for up to USD13.0 million in cash and shares, in an acquisition to be supported by a share placing to raise GBP4.0 million, and to sell its nicotine gum business in a separate move.
Revolymer, which was incorporated in 2005 as a spinout from Bristol University and began trading on AIM in July 2012, said it will pay USD7.0 million up front for Itaconix, with USD3.0 million of that amount in cash and USD4.0 million in the form of 6.3 million shares at an issue price of 44.38 pence each. A deferred amount of up to USD6.0 million will be paid in shares, depending on whether or not performance criteria are met.
Itaconix, which was founded in 2008 by John Shaw, its chief executive officer, and Yvon Durant, its chief technology officer, had a loss before interest, tax, depreciation and amortisation of about USD800,000 on sales of USD1.3 million, based on unaudited 2015 figures, Revolymer said. About USD5.0 million has been invested in the business to date, based on unaudited figures. Shaw and Durant are among Itaconix’s major shareholders.
Revolymer’s £4.0 million fundraising is being conducted through an accelerated bookbuild placing, a process that requires little marketing and allows for shares to be sold in a short period of time. About half of the money raised will fund the cash element of the acquisition, with the other half to provide working capital for the combined business, develop and commercialise products, and pay transactional costs.
Woodford Investment Management, which was established in 2014 by renowned money manager Neil Woodford, and IP2IPO Ltd, part of FTSE 250 investor IP Group PLC, have “indicated a willingness” to maintain their shareholdings in Revolymer, the company said.
In addition, Woodford Investment Management has indicated “in principle” a willingness to invest an additional amount to to increase its shareholding to over 30% and less than 50% of Revolymer.
The company said also that it has agreed heads of terms with a European nicotine gum-focused marketer over a potential transfer of Revolymer’s nicotine gum business in exchange for equity in the enlarged marketer company. The European nicotine gum-focused marketer was not named in the statement. Revolymer expects the transfer of its nicotine gum business to complete in the third quarter of 2016.
Revolymer said the European nicotine gum marketer has EU regulatory approval for its products and an established European customer base, which “complements” Revolymer’s Canadian customer base. The company said it is “anticipated” it would have “no ongoing cost obligation” on completion of the transfer.
Kevin Matthews, chief executive of Revolymer, said the two transactions are a “key step” in the company’s strategy of “building an innovative and differentiated specialty chemical company delivering high performance ingredients to its target markets through the development of novel polymers, responsive encapsulation and targeted delivery systems”.
“Itaconix represents an extremely complementary business in terms of markets and products and also provides a presence in the important North American market. In parallel the asset transfer of Revolymer’s nicotine gum business to a larger business focussed solely on nicotine gum with a management team that has substantial sector experience should create further strategic focus for both segments of Revolymer’s business,” Matthews said in a statement.
Panmure Gordon is acting as nominated adviser, broker and bookrunner on the placing.