LIFE shares suspended as it considers combination

Life Science Developments released an update on Thursday, saying that since its general meeting held in October 2015, the board has been reviewing a number of possible acquisition opportunities with a view to implementing its investing policy.

The AIM-traded company confirmed that it has now signed a non-binding term sheet to acquire up to 100% of the issued share capital of The Diabetic Boot Company for new shares in LIFE.

The acquisition, if completed, would result in the company's shareholders having at least a minimum of 7% of the enlarged group, prior to the impact of any associated fund raising.

LIFE’s board said the precise valuation of DBC will be determined on admission to AIM of the combined group as set out in the term sheet.

“The proposed transaction with DBC will provide it with a cash injection and access to capital markets in order to deliver [on its] sizeable growth opportunity,” LIFE’s board said in a statement.

“The acquisition is subject, inter alia, to the completion of due diligence, documentation and compliance with all regulatory requirements, including the AIM Rules.

“There can be no guarantee that all such matters can be completed,” the board warned.

As a precursor to the acquisition, LIFE said it has also agreed to provide DBC with a short-term loan of £0.2m for working capital purposes to be drawn down in two tranches, with £78,000 being drawn down immediately and the balance available subject to certain conditions being satisfied by DBC over the next seven days.

The loan will pay a coupon of 7%, is unsecured and is fully repayable on the earlier of 31 March 2017 or the date on which DBC secures additional equity funding of £1m.

As the acquisition would, if completed, amount to a reverse takeover under the AIM Rules, it requires trading in the company's shares to be suspended, which occurred at 0730 BST on Thursday.

“Should the acquisition proceed, the Company intends to hold an extraordinary general meeting in due course in order to seek specific shareholder approval for the reverse takeover under AIM Rule 14 and associated matters.”