Medical devices maker Consort Medical Plc (CSRT.L) Thursday announced the proposed sale of its King Systems Corp., division to Danish diagnostic and life-supporting equipment developer Ambu A/S for a maximum consideration of $170 million or 105 million pounds. Following the disposal, Consort will be a focused pharmaceutical services business. The shares rose about 6 percent in the morning trade.
Consort stated that the consideration consists of an initial payment of $120 million and further contingent payments of up to $50 million, receivable over the next three years. Consort and Ambu have signed a sale and purchase agreement, under which Ambu will acquire the entire issued capital stock of King. The disposal is expected to be completed in the first quarter of calendar 2013.
Founded in 1977, Consort's King division manufactures and markets disposable airway management products and receives about 87 percent of its revenue from the US markets. As at October 31, 2012, the business had gross assets of 85.9 million pounds. For the year ended April 30, 2012, it generated a loss before tax and after special items of 0.8 million pounds.
The company said its strategy is to focus increasingly on pharmaceutical services and drug delivery opportunities that complement its core Bespak business division.
Consort intends to retain the proceeds to strengthen its balance sheet. Jonathan Glenn, chief executive of Consort stated, "With our strengthened balance sheet, we will be able to consider investments to re-allocate our capital into growth opportunities that complement Bespak, but only within strict financial criteria."
The disposal will be subject to approval of Consort shareholders approval and other customary conditions. Evercore Partners is acting as sponsor and financial adviser to Consort in the deal.
CSRT.L is currently trading at 839 pence, up 48 pence or 6.07 percent, on a volume of 345,449 shares.
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