Axis-Shield PLC - Acquisition, etc

RNS Number:0863F
Axis-Shield PLC
7 February 2000


                                       
                                AXIS-SHIELD PLC
                    Acquisition of Nycomed Diagnostics for
                        NOK 288 million (#22.0 million)
                                       
Axis-Shield plc ("Axis-Shield") announces today that it has agreed to acquire
the diagnostics business of Nycomed Pharma A/S ("Nycomed Pharma"), Nycomed
Diagnostics, for approximately NOK 288 million (#22.0 million).  Nycomed
Diagnostics is a leading developer, manufacturer and marketer of branded,
point-of-care ("POC") diagnostics products in Northern Europe.

 Acquisition highlights

- Enhances Axis-Shield's ability to develop and market directly POC products
developed from its own range of innovative analytes, in particular its
homocysteine and AFT tests
- Provides an established product range and a sales and marketing capability
in the expanding POC diagnostics market
- Provides substantial revenue growth, is cash generative and is expected to
enhance earnings in the year ending 31 December 2000
- Consideration to be satisfied through a vendor placing to raise
approximately NOK 248 million (#18.9 million) and a loan note of NOK 40
million (#3.1 million)
- Simultaneous cash placing to meet the costs of the acquisition and for
general working capital for the enlarged Group

Introduction

Following its success in securing commercial agreements for its AFT and
homocysteine products with leading laboratory-based test machine manufacturers
for use in the laboratory market, Axis-Shield is now also seeking to develop
its capabilities in the POC diagnostics market.  The rapidly expanding POC
market is the fastest growing segment of the in-vitro diagnostics industry and
is currently estimated to be worth $1 billion worldwide.  In contrast to the
hospital laboratory sector, the POC market is fragmented and dominated by no
single company or group of companies.

The acquisition of Nycomed Diagnostics provides the Group with an established
profitable POC product range and valuable additional expertise in the
development and marketing of POC products. The Directors also believe that the
cardiovascular disease segment of the market is one that is particularly
suited to POC diagnosis, offering an opportunity to use Axis-Shield's
homocysteine and AFT tests in this market.

The acquisition is expected to enhance Axis-Shield's earnings in the year
ending 31 December 2000.

Nycomed Diagnostics

Nycomed Diagnostics is an international diagnostics business, which is
currently a non-core business unit of Nycomed Pharma.  Headquartered in Oslo
with approximately 145 employees (115 of which are in Norway), Nycomed
Diagnostics develops, manufactures and markets reagents individually and in
test kits.  Nycomed Diagnostics' biggest revenue generator is a rapid POC
diagnostic system marketed under the NycoCard trademark.  The NycoCard system
can be configured to measure a variety of diagnostics markers.  The highest
selling NycoCard product currently on the market is a test to identify whether
a patient is suffering from a viral or bacterial infection.  One of the
fastest-growing NycoCard products is a glycated haemoglobin test for use in
long-term diabetes monitoring. This test was invented and patented by Axis-
Shield and is currently licensed to Nycomed Diagnostics for production and
sale.

Nycomed Pharma was sold by Nycomed Amersham plc in May 1999 to Nycomed Holding
A/S, a company owned by an international private equity fund, advised by
Nordic Capital, and Nycomed Amersham plc.  Nycomed Diagnostics' revenues in
the year ended 31 December 1998 were approximately NOK 196 million (#15.0
million), with operating profits for the same period of approximately NOK 33
million (#2.5 million).  The unaudited assets of Nycomed Diagnostics that are
being acquired by Axis-Shield were approximately NOK 100 million (#7.6
million) at 31 December 1999.

Nycomed Diagnostics has focused on those markets where the demand for POC
diagnostics is growing and where the market infrastructure and healthcare
reimbursement schemes support POC.  To date, the Nordic region and Switzerland
have been the main POC markets in Europe, and these countries currently
account for approximately 75% of Nycomed Diagnostics' sales.  Nycomed
Diagnostics has a dedicated sales force totalling 28 employees in the Nordic
countries, with sales in other markets currently undertaken by either the
Nycomed Pharma sales force or third parties.

Integration Strategy

Nycomed Diagnostics will be renamed Axis-Shield POC AS and will be the basis
for the Group's expansion in the POC sector. The Nycomed Diagnostics sales
team in Scandinavia will be integrated with the Medinor sales team, acquired
by Axis-Shield in October 1999, and will assist in the growth of direct sales
of the Group's products throughout Scandinavia.  Outside Scandinavia, the
Company will continue to use the Nycomed Diagnostics distribution network
already in place.  In R&D, Nycomed Diagnostics' team will be integrated with
Axis-Shield's existing R&D function, representing a substantial resource for
the development of new technologies for both laboratory and POC use.

Geographically, the acquisition gives Axis-Shield a strong presence in the POC
sector in its home market in Northern Europe.  This will be used as a base
from which to expand elsewhere in Europe and to grow its presence in the US
and Japanese markets.  In the US, Nycomed Diagnostics has recently entered
into a commercial agreement for its diabetes test with the privately-owned US
healthcare company, Primus, Inc.

Terms and Funding of the Acquisition

Prior to completion of the acquisition, the Nycomed Diagnostics business was
transferred into the newly formed company which is being acquired by Axis-
Shield.  The acquisition and associated placings are conditional, inter alia,
on third party consents being obtained to the assignment of two material
contracts and on the vendor placing agreement between Axis-Shield, Carnegie
ASA ("Carnegie") and Nomura International plc ("Nomura") becoming
unconditional and not being terminated, and admission of the new ordinary
shares to the London and Oslo Stock Exchanges becoming effective.  Application
has been made to the London and Oslo Stock Exchanges for the new ordinary
shares to be admitted to listing.  The placing agreement may be terminated in
certain circumstances prior to completion, including if there is such a change
in financial, political or economic conditions such that, in the reasonable
opinion of Nomura and Carnegie, the success of the placing and the
distribution of the placing shares is likely to be materially prejudiced.  The
acquisition is expected to become unconditional on or around 9 February 2000,
when dealings in the new ordinary shares are expected to commence.

The consideration for the acquisition will be approximately NOK 288 million
(#22.0 million).  The majority of the consideration will be satisfied through
a vendor placing of approximately 2.6 million new Axis-Shield ordinary shares
(representing approximately 6.2% of its current issued share capital) at 730
pence per ordinary share to raise approximately NOK 248 million (#18.9
million).  The placing price represents a discount of approximately 4% to the
closing middle market price of an Axis-Shield ordinary share on the Official
List of the London Stock Exchange on 4 February 2000.

Axis-Shield will also guarantee a NOK 40 million (#3.1 million) loan note to
be issued by Nycomed Pharma to the new company in connection with the
acquisition.  This loan note will be repayable by Axis-Shield at the latest
two years from completion of the acquisition.  The consideration payable is
subject to adjustment upwards or downwards following completion on the basis
of completion accounts.  The extent of this adjustment is limited such that
the maximum consideration payable is NOK 313 million (#23.9million).

Simultaneously with the vendor placing, Axis-Shield is proposing to issue an
additional approximately 1.0 million new ordinary shares (representing
approximately 2.4% of its current issued share capital) for cash at the same
price as in the vendor placing.  The net proceeds from this placing will be
used to meet the costs of the acquisition and for general working capital
purposes.  The issues of new ordinary shares have been fully underwritten by
Carnegie and Nomura.

The Norwegian Business Acquisition Act requires the acquisition to be reported
to, and approved by, the Norwegian Ministry of Trade and Industry.  Any
approval granted may be subject to conditions imposed by the Ministry.  The
Company has received legal advice that the transaction is likely to be
approved.  In the unlikely event that approval is not granted, the Company has
the right to sell the new company back to Nycomed Pharma.

Commenting on the acquisition, Svein Lien, Chief Executive Officer of Axis-
Shield, said:

"With the acquisition of Nycomed Diagnostics, Axis-Shield will have
complementary strengths in the two key diagnostics markets, hospital
laboratories and POC.  Following our successes in securing major partners for
Axis-Shield's range of test products in laboratory-based testing, Nycomed
Diagnostics represents a substantial opportunity for Axis-Shield to become one
of the world leaders in the fragmented POC market."

Axis-Shield has been advised on the acquisition by Carnegie and Nomura.


A presentation will be held for UK analysts at Financial Dynamics at 10.00am
today, 7 February 2000.  Financial Dynamics' address is Holborn Gate, 26
Southampton Buildings, WC2.  Coffee will be available from 9.45am.

A presentation for analysts in Norway will be held on Tuesday, 8 February 2000
at 8.00am (Norwegian time) at Hotel Continental, Stortingsgate 24/26, Oslo.
Please contact Alison Bowsher, Financial Dynamics, for further details on
[phone].


Enquiries

Axis-Shield plc                                 
Svein Lien                 Today:               [phone]
Chief Executive Officer    Thereafter:          [phone]
                           Mobile:              [phone]
                                                
                                                
Jane Karwoski              Today:               [phone]
Finance Director           Thereafter:          [phone]
                           Mobile:              [phone]
                                                
Carnegie ASA                                    
Thomas Ranje               Tel:                 [phone]
                                                
Nomura International plc                        
Charles Spicer             Tel:                 [phone]
                                                
Financial Dynamics                              
Sophie Pender-Cudlip/      Tel:                 [phone]
Sarah Mehanna


Additional Information

Carnegie is acting for Axis-Shield and no-one else in connection with the
acquisition and issue of new ordinary shares and will not be responsible to
anyone other than Axis-Shield for providing the protections afforded to
customers of Carnegie, nor for providing advice in relation to the acquisition
and issue of new ordinary shares.

Nomura, which is regulated in the United Kingdom by The Securities and Futures
Authority Limited, is acting for Axis-Shield and no-one else in connection
with the acquisition and issue of new ordinary shares and will not be
responsible to anyone other than Axis-Shield for providing the protections
afforded to customers of Nomura, nor for providing advice in relation to the
acquisition and issue of new ordinary shares.


Notes to Editors

Axis-Shield plc
Formed  through  the  merger of Axis Biochemicals ASA of  Norway  and  Shield
Diagnostics  Group  plc  that was completed in May 1999,  Axis-Shield  is  an
international in-vitro diagnostics company, headquartered in Dundee with  R&D
and  manufacturing  bases in Dundee and Oslo.  The Group specialises  in  the
development, manufacture and marketing of innovative proprietary  diagnostics
kits  for cardiovascular risk assessment, autoimmune and infectious diseases,
alcohol abuse and diabetes.

Exchange rate of #1 for every NOK 13.1 used throughout this release.


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