Biohit decides to sell its liquid handling business to Sartorius Lab Holding GmbH and changes its financial guidance
26.10.2011 18:52
Biohit Oyj
Company Announcement
26.10.2011 6.52 pm
Biohit Oyj and Sartorius Lab Holding GmbH have concluded an agreement for the sale of Biohit’s liquid handling business to Sartorius. As a result, Biohit will change its financial guidance.
The liquid handling business develops, manufactures, and markets laboratory equipment and accessories for the pharmaceutical, food, and other industries. Biohit's products are also used in research institutions, universities, and hospitals. The product range includes mechanical and electronic pipettes, as well as disposable tips.
The transaction is subject to approval by Biohit Oyj’s Shareholder Meeting and the authorities. The Biohit Oyj Board of Directors has approved the transaction and decided to propose that the Shareholder Meeting approve the transaction and authorise the Board to close the deal. Osmo Suovaniemi, Biocosmos Oy, and Interlab Oy, together representing approximately 69% of the voting rights conferred by Biohit’s shares, have made a commitment to support the sale at the Shareholder Meeting.
If the Shareholder Meeting approves the transaction, it is expected to be performed by the end of 2011. Once the sale is completed, Biohit’s liquid handling business will be transferred to Sartorius, including the associated intellectual property rights, production facilities, subsidiaries, other property, agreements, and certain responsibilities.
The purchase price is 68 million euros in cash, which the purchaser transferred to an escrow account when signing the agreement of sale. Ninety per cent of the purchase price will be credited to the seller when the transaction is completed, while the remaining 10% will be retained as security against any claims related to the sale, until 31 March 2014.
The employees and management team of the liquid handling business will transfer to the new owner on their existing terms of employment. The diagnostics employees and Management Team will remain in the service of Biohit Oyj. Biohit’s current president and CEO, Jussi Heiniö, will transfer to Sartorius as part of the transaction, with a new president and CEO to be appointed later. The composition of the Biohit Board of Directors will remain unchanged.
The sales and profitability trends of Biohit’s liquid handling and diagnostics businesses are as follows:
2008
2009
2010
1-9/2011
Liquid handling business, net sales (million euros)
33.6
33.6
37.8
28.9
Liquid handling business, operating profit/loss (million euros)
3.7
3.2
3.4
2.7
2008
2009
2010
1-9/2011
Diagnostics business, net sales (million euros)
1.5
1.8
2.2
1.4
Diagnostics business, operating profit/loss (million euros)
-2.4
-2.0
-2.9
-1.7
Biohit’s future focus – diagnostics and cancer prevention
The gains from the transaction will enable Biohit to focus on developing the diagnostics business and tapping its global market potential. In the first phase, investments will be made in strengthening sales and marketing resources and the global distribution network. In addition, the company will concentrate on the development of production technology and on development and commercialisation of new products and services based on the GastroPanel and Acetium innovations.
Growth will be driven particularly by the ageing of the population and the resulting significant increase in the need for safe and cost-effective diagnosis and prevention of diseases. People will become more aware of the carcinogenic effect of acetaldehyde and the risks involved. This is expected to increase the interest in Biohit’s products and services considerably and pave the way for business growth.
Some of the income will be reserved for possible acquisitions that will improve the visibility of the products in the market and facilitate their commercialisation. The aim is to increase sales and profitability, thereby ensuring the company’s ability to pay dividends.
The foundation for Biohit’s future growth
Biohit Oyj’s diagnostics business develops, manufactures, and markets tests and analysis systems for the diagnosis and prevention of diseases of the gastrointestinal tract (www.biohit.com/diagnostics/product-brochures, www.biohit.com/diagnostics/service-laboratory and www.biohit.com/ State of the art GastroPanel and Acetium innovations for the unmet need), as well as products for binding and inactivating carcinogenic acetaldehyde (e.g., Acetium capsules and the BioFood method). These unique products are based on the company’s own innovations, which are protected by patents and patent applications.
GastroPanel is a stomach health test that gives a wealth of information about the state of the gastric mucosa. GastroPanel provides a means of diagnosing Helicobacter pylori infection and atrophic gastritis, which is usually asymptomatic. It also aids in evaluating which people experiencing discomfort in the upper abdomen (about one third of the population) and which asymptomatic gastric cancer and other patients at risk need to be referred to further examinations. Before the GastroPanel innovation, diagnosis of gastric cancer and other risks required histological examination of biopsy samples taken during gastroscopy; however, such an examination was often performed only when a disease causing alarming symptoms had already progressed beyond treatability.
In October 2009, the WHO classified acetaldehyde as a Group I human carcinogen. All Group I carcinogens, such as asbestos, tobacco, and acetaldehyde, are subject to the same ethical and legislative principles, regardless of their source. All possible methods should be used to reduce exposure to these carcinogens, including exposure through food and the environment.
Exposure to acetaldehyde has been connected to around four million new cases of cancer every year, worldwide, or close to 40% of all cancers. Acetaldehyde is particularly hazardous to people with an anacidic stomach caused by atrophic gastritis (approximately 500 million people). Mouth bacteria and fungi can live in an anacidic stomach and produce carcinogenic acetaldehyde from alcohol and sugar. Moreover, 5–10% of the population of industrialised countries use proton pump inhibitors, which result in an acid-free stomach. Corpus atrophic gastritis – i.e., an anacidic stomach caused by atrophy and functional disorder of the upper part of the stomach – can be diagnosed by means of GastroPanel testing.
The Acetium capsule is currently the only means for binding and inactivating carcinogenic acetaldehyde in an anacidic stomach. Its use is recommended for all risk groups in connection with the consumption of food and alcohol. The BioFood innovation enables the elimination of acetaldehyde remaining in food and alcohol (www.acetium.com/acetaldehyde-exposure-test).
New innovations
Laboratory tests have produced encouraging results related to the use of the Acetium capsule for the treatment of Helicobacter pylori infection. More than half of the world’s population suffers from H. pylori infection, and the usual treatment – a combination of two antibiotics and a proton pump inhibitor – is expensive and will lead to a dramatic increase in antibiotic-resistant H. pylori strains. The purpose of clinical studies to be launched this year is to examine whether an H. pylori infection can be treated through the use of BioAcetium capsules alone or administered in conjunction with antibiotics.
Biohit is also about to launch a research project with its partners to study whether a chewable Acetium tablet, which binds and inactivates carcinogenic acetaldehyde dissolved in saliva from tobacco smoke, can help people to stop smoking. From the results of countless animal tests, it is known that carcinogenic acetaldehyde is also highly addictive. The operation of BioFilter, which effectively binds the acetaldehyde contained in tobacco smoke, will be tested for this purpose as well.
Revised financial guidance for 2011
Upon completion of the sale, the entire liquid handling business will be omitted from Biohit Oyj’s result for the reporting period. Biohit will consequently change its financial guidance with respect to net sales. From this day forward, the liquid handling business will be reported upon as discontinued operations and diagnostics as continuing operations. The new net sales forecast for continuing operations is 2 million euros and the estimated operating loss 2 million euros. The full-year operating profit of the discontinued operations is estimated at almost 50 million euros, including 45 million euros of capital gains, after taxes. The value of the fixed assets and inventory to be transferred to the buyer is estimated at 60% of the consolidated balance sheet total. On 30 September 2011, the balance sheet total was 33.7 million euros.
For more information, please contact:
Osmo Suovaniemi
Chairman of the Board of Directors
Tel. +358 40 745 5605
osmo.suovaniemi@biohit.com
Distribution:
NASDAQ OMX Helsinki Oyj
Central storage facility (www.oam.fi)
Press
www.biohit.com
About Biohit
Biohit Oyj is a globally operating Finnish biotechnology company established in 1988. Biohit's mission crystallises in its motto “Innovating for Health”. The purpose of the company is to produce innovations, new technologies and analysis systems for use in medicine, research institutions and industry, helping to promote research and diagnostics and to improve quality of life by preventing disease, human suffering and financial loss. Our duty is also to innovate and develop the marketing and availability of our products and services, in order to ensure the profitable growth of the company and its ability to pay dividends.
Biohit works with scientific communities to produce new technologies, products and services based on research results and innovations that can be used to develop safe and cost-effective liquid handling solutions for laboratory work, as well as diagnostic tests for the early detection and prevention of diseases of the gastrointestinal tract.
Biohit has two business segments: liquid handling and diagnostics. Liquid handling products include electronic and mechanical pipettes, disposable tips as well as pipette maintenance and calibration services for research institutions, healthcare and industrial laboratories.
The diagnostics business comprises products and analysis systems for the early diagnosis and prevention of gastrointestinal diseases, such as the blood-sample based GastroPanel examinations for the diagnosis of stomach illnesses and associated risks, quick tests for the diagnosis of lactose intolerance and H. pylori infection in connection with gastroscopy, and the ColonView examination for the early detection of intestinal bleeding that indicates a risk of colorectal cancer. Acetium reduces the amount of carcinogenic acetaldehyde in an anacidic stomach.
The Biohit Group employs around 440 people. The company is headquartered in Helsinki, Finland, and has subsidiaries in France, Germany, the UK, Russia, India, China, Japan and the USA. The company also has a representative office in Singapore. Biohit's products are also sold through about 200 distributors in 70 countries.
Since 1999, Biohit's Series B share has been quoted on NASDAQ OMX Helsinki in the Small cap/Healthcare group and is traded under the code BIOBV.
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