Novacyt buys Omega Diagnostics' infectious disease business

In-vitro diagnostics firm Omega Diagnostics on Thursday struck a deal for the disposal of its infectious disease business, ID Assets, to clinical diagnostics specialist Novacyt for up to £2.175m.

Of the total consideration for the deal between the two AIM-traded companies, which does not include Omega’s VISITECT CD4 Test, £0.375m is subject to post-completion conditions being met which may take up to 12 months.

The asset includes the customers, suppliers, trademarks, contracts, stocks, technical files and know-how in order to manufacture, distribute and market the company’s products. ID Assets had a book value of approximately £0.6m and saw respective revenues and profit before central overheads of £2.5m and £0.3m in the 12 months leading up to 31 March 2017, with similar results expected for the following year from unaudited results.

Novacyt said the acquisition added a "highly complementary" product range that opens new sales channel opportunities, particularly on the African continent, with the addition expected to be immediately earnings accretive in the second-half of 2018.

Graham Mullis, chief executive of Novacyt, added: "This acquisition is expected to deliver material cost and growth synergies as we leverage the Novacyt infrastructure and integration will start immediately after completion. We continue to assess a deep pipeline of potential further acquisitions."

Omega will continue to provide manufacturing and storage services to the company for a 12-month transitional period.

David Evans, chairman of Omega, said: "This divestment is the first stage of a process following the strategic review as we seek to realise value for shareholders in the short-term from our other assets as well as building value through the more rapid exploitation of the opportunity in CD4 testing at the point of care."

Omega said the proceeds will be used as working capital for the development of a new strategy aimed at realising the value of VISITECT CD4, a test that assesses the progression of HIV.

As of 1023 BST, Omega Diagnostics’ shares were down 3.15% at 10.98p, while Novacyt's were unchanged at 60.50p.