Science Group to acquire Technology Sciences Group

Science Group announced on Monday that it has exchanged contracts to acquire 100% of the equity of Technology Sciences Group, Technology Sciences Europe and associated subsidiaries from Dentons Innovation Group US.

The AIM-traded firm said completion was anticipated within “the next few days”.

It said TSG provided scientific advisory and regulatory services to a “diverse” client base in the agricultural, chemical, consumer, cosmetic, medical device and food and beverage industries.

Initial consideration for the acquisition is $17m (£13m).

A deferred consideration of $0.75m would be payable in December 2019, subject to certain conditions.

The group's existing cash resources would be used to satisfy the consideration, the board said, with one-off integration costs to be incurred in the current financial year, although they were not anticipated to exceed £1m.

“Technology Sciences Group Inc was founded in Washington DC in 1990 and also has an office in California and Ontario, Canada,” Science Group’s board said in its statement.

“Technology Sciences Europe is the UK-based holding company for the European operations, which opened in 2000, and now has subsidiaries in the UK, Germany, Spain and Slovenia with additional offices in France, Hungary, Ireland, Poland, Romania and Slovakia.”

Science Group said that historically, financial results had not been consolidated, and in the most recent financial year the TSG businesses reported revenue in aggregate of $20.3m (£15.5m) and profit before tax of $1.0m (£0.8m), based on current exchange rates.

“The UK and US-based businesses accounted for approximately 85% of the total revenue and a similar proportion of TSG's 120 employees,” Science Group’s board added.

“Net assets at 30 June were $3m, the majority of which was cash which will be acquired with the business.”

In addition to the consideration for the equity, a one-off award to key senior managers of up to an aggregate of 400,000 PSP options was anticipated.

The board said it would seek approval at the group's next General Meeting for the exceptional share option grant to be incremental to the plan limit within the 2013 performance share plan.

“The acquisition of the TSG business is highly complementary to Science Group's existing operations - particularly the international food & beverage regulatory services in Leatherhead Food Research - strengthening the group's offerings in a number of market sectors, increasing the scale of the US operations and establishing a significant continental European footprint,” the board concluded.