Integumen agrees deal to take over Modern Water

Integumen and Modern Water have reached agreement on the terms of a recommended offer to be made by Integumen for the entire issued and to be issued share capital of Modern Water, they announced on Friday.

The two AIM-traded companies said that under the terms of the offer, Modern Water shareholders would be entitled to receive one existing Integumen share for each Modern Water share, and one new Integumen share for every 10 Modern Water shares.

They said the offer values the entire issued and to-be-issued share capital of Modern Water at about £21.25m.

The offer represents a value of around 4.05p per Modern Water share and a premium of approximately 44.6% to the Modern Water share closing price of 2.8p on the last practicable date, and 110% to the 90 trading day average price of 1.92p per Modern Water share.

Integumen and Modern Water said they had been working together since signing a production and logistics agreement on 17 March, under which Integumen was contracted to produce test kits for Modern Water.

That had led to “significant” collaboration between the two companies, which had provided invaluable insight into the Modern Water business.

The board of Integumen said it believed that a merger of the two businesses would be a natural next step, adding that there are synergies and opportunities across the combined businesses in the areas of science, IT, distribution channels, global reach, marketing and sales and management.

“There has been significant collaboration between Integumen and Modern Water over the last six months which has provided the Integumen Board with invaluable insight into the Modern Water business,” said Integumen chairman Ross Andrews.

“The Integumen board believes that a merger of the two businesses would be a natural next step and that there are exciting synergies and opportunities across the combined businesses in the areas of science, IT, distribution channels, global reach for supply chain, sales, marketing and distribution channels.”

Nigel Burton, independent non-executive director of Modern Water, added that the independent Modern Water directors had carefully considered both the offer and its alternatives.

“After a challenging 2019, 2020 has seen a placing which enabled Modern Water to address all outstanding liabilities, and to provide working capital to begin to rebuild and strengthen its sales, marketing and distribution channels.

“The offer provides the opportunity to reduce implementation risks, enhance the technical and human resources available, and grow shareholder value more quickly than any of the alternatives available.

“The independent Modern Water directors therefore unanimously recommend the offer.”

At 1318 BST, shares in Modern Water were up 21.97% at 3.42p, while those in Integumen were down 8.67% at 3.7p.