Consort Medical doubles down on rhetoric after Carclo rejects bid

Consort Medical announced on Monday that, following a meeting between itself and Carclo on 25 May, it submitted a letter on 29 May setting out a non-binding proposal for a potential acquisition of Carclo.

The AIM-traded firm said the proposal valued each share in Carclo at 116p per share, and the consideration was to be in the form of new shares in Consort.

As of 29 June, that implied an exchange ratio of 0.0973 Consort shares for each Carclo share.

The letter also contained a request for a meeting between senior executives of the two companies to explore the proposal and its merits in more detail.

“The board of Carclo rejected the proposal on 1 June, and has subsequently rejected further requests from Consort for a meeting,” the Consort board said in Monday.

“The terms of the Proposal represent a premium of approximately 43.6% to the Carclo closing share price of 80.8p on 29 June, being the last trading day prior to this announcement.”

Consort’s board said it believed that the proposal offered shareholders in Carclo an “attractive upfront premium” along with “meaningful participation” in the value creation over time, as the benefits of combining Bespak and Carclo Technical Plastics were realised.

The board said it believed there were “a number” of attractive benefits arising from the combination of Bespak and Carclo Technical Plastics, including that the combined Bespak/Technical Plastics would have a global manufacturing footprint with a “strengthened presence” in Europe, and new geographies for Consort in Asia and North America.

It also noted that the combined Bespak/Technical Plastics would create a “market leading” drug-delivery CDMO business with expanded positions in injectables and diagnostics, in addition to enlarged scale and broadened product portfolios.

The combined business would also have enhanced capabilities including precision tool making, the board said, adding that the complementary nature of the Bespak and Technical Plastics customer bases would allow the enlarged business to create value from cross-selling opportunities over the medium-term.

Consort said it would also seek to apply its proven track record of increasing profit margins to the Technical Plastics business.

“In addition to these benefits, Consort believes that there would be the opportunity to extract cost synergies from eliminating the overlap in costs between Consort and Carclo.

“The Board of Consort will continue to evaluate Carclo's LED Technologies and Aerospace businesses during due diligence to assess whether Consort would seek to retain or dispose of each of the businesses following the completion of the transaction.

“The proceeds of any subsequent disposal of either of these businesses would allow Consort to repay debt or reinvest in the combined core business.”