Cash offer by Ivytan of SEK 39 per share in Q-Med corresponding to a premium of 40 per cent[1]
The Offer is not being made, and this press release may not be distributed, directly or indirectly, in or into, nor will any tender of shares be accepted from or on behalf of holders in, Australia, Canada, Japan, New Zealand, South Africa or the United States of America, or any other jurisdiction in which the making of the Offer, the distribution of this press release or the acceptance of any tender of shares would contravene applicable laws or regulations or require further offer documents, filings or other actions in addition to those required under Swedish law.
Ivytan AB (“Ivytan”), indirectly owned by EQT V (“EQT”) and Lyftet Holding B.V. (“Lyftet”), a company controlled by Bengt Ågerup (“Ågerup”), announces an offer (the “Offer”) to tender all the shares in Q-Med AB (publ) (“Q-Med” or the “Company”) of SEK 39 in cash for each share. The shares in Q-Med are listed on NASDAQ OMX Stockholm AB (“OMX”), Nordic List, Mid Cap.
Summary of the Offer
· Ivytan offers SEK 39 in cash (the “Price”)[2] for each share in Q-Med
· The Offer represents a premium of:
- 40 per cent relative to the volume weighted average share price during the last month ending 31 October;
- 37 per cent relative to the volume weighted average share price since the interim report on 24 October;
- 28 per cent relative to the volume weighted average share price during the last three months ending 31 October; and
- 24 per cent relative to the closing share price on 31 October.
· Lyftet owns 47.5 per cent of the capital and votes in Q-Med. Ågerup has agreed to ensure that the shares he controls are transferred into Ivytan, if the Offer is completed. The transferred shares are valued at the Offer Price. Further, Ågerup has committed not to engage with any other offeror during the next twelve months
· The Offer will be financed by equity, shareholder loans and bank debt
· The acceptance period is expected to commence on or about 12 November and end on or about 2 December
· A press conference is held today at 10.00 (CET) at hotel Scandic Anglais, Stockholm
“This is the best for the company’s long term development. The challenges that have gradually arisen over recent years are better addressed in a private environment. I am looking forward to working with EQT, which offers financial strength as well as the industrial and strategic expertise that I find highly relevant to developing Q-Med going forward”, says Ågerup.
”We are prepared to jointly assume the strong ownership role that is necessary for a healthy future development of Q-Med. The company needs to make capital investments to meet the increased competition within the esthetics area and accelerate the process of changing the Hospital Healthcare business model. We want to invest in growth” says Caspar Callerström, partner at EQT Partners, adviser to EQT V.
Background and reasons for the Offer
Q-Med was founded in 1987 by Ågerup to commercialise the research that Ågerup had carried out around hyaluronic acid. Q-Med has run its operations in its present structure since the end of 1995, and most of the Company’s products are based on the Company's patented technology, NASHA™, for the production of stabilised non-animal hyaluronic acid. In 1996 approval was obtained for the first product, Restylane® for the filling out of wrinkles and lip augmentation, for sales in Europe. The Company was listed on the Stockholm Stock Exchange in 1999.
Since its listing, Q-Med has developed into a mature biotechnology/medical device group with strong positions in esthetics primarily in Europe and North America. Current trading has been weak and the competition on the global esthetics market is increasing. This affects the Company to a large extent as Restylane® represents a major part of sales. The Hospital Healthcare product area has had weak profitability and the Company has announced its decision to terminate further product development and is seeking new sales and marketing channels for existing products.
As Q-Med has built leading positions in the esthetics market it has become evident to Ågerup that the, at times, short term demands on profitability and extensive disclosure of information faced by public companies are negative for the Company. As a listed company, Q-Med continuously has to disclose significant information about the business which is negative from a competition perspective.
Ågerup has, in his capacity as largest shareholder in Q-Med, on a number of occasions been approached by private equity companies during the last few years. These private equity companies have been of the opinion that Q-Med would have better prospects under private ownership. Ågerup has over time come to share this view. Against this background, Ågerup initiated discussions with a number of private equity firms to explore the basis for cooperation during the spring and summer of 2008. Starting in June, EQT carried out an extensive market study to analyse the esthetics as well as hospital healthcare markets. Based on this study and an evaluation of publicly available information, EQT formed a business plan for Q-Med that was presented to, and then discussed with Ågerup. During these discussions it became evident to Ågerup that EQT has a good understanding of Q-Med and its markets and that EQT and Ågerup share a common view of the measures necessary to secure and improve Q-Med’s long term market position and profitability. As a result, Ågerup decided to continue the discussions with EQT on an exclusive basis.
EQT and Ågerup believe that Q-Med, from an industrial perspective, would have better prospects for value creation as a private company. Under private ownership, Q-Med’s competitors would not to the same extent or as quickly get access to sensitive information about the Company. As a private company, Q-Med can increase the internal transparency and focus all efforts on its business activities. Negotiations with potential partners would also be facilitated.
To secure a healthy long term development of Q-Med, EQT and Ågerup agree that significant capital investments and changes are needed in both the Esthetics and Hospital Healthcare product areas. Such measures can be expected to have a negative effect on the Company’s short and medium term profitability and cash flow and lead to a considerable increase in the Company’s risk. Furthermore it impacts the Company’s funding needs in a time of economic instability.
In order to capture the true potential in the Esthetics product area, Q-Med needs to protect and improve the Company’s market position in existing markets, as well as diversify its product portfolio and expand to new markets. The need for an efficient and significant transformation increases due to the weakening economic environment. Continued changes to product area Hospital Healthcare’s business model are also needed to secure a long term, healthy profitability. This process has already been initiated by the Company but would benefit from being executed more rapidly despite the weakening economic environment.
EQT and Ågerup are of the opinion that de-listing Q-Med will facilitate the implementation of the aforementioned capital investments and changes. EQT provides industrial and strategic expertise which will be beneficial to Q-Med in its transformation. EQT can further provide competence and experience in connection with Ågerup’s continued involvement and future succession. In addition, EQT provides financial resources for investments in growth.
EQT and Ågerup place great value on Q-Med’s other members of the management team and employees and expect that the Offer will create strengthened growth and positive effects for the employees in the long term. The Offer is not expected to have any significant short term effects for the employees or those sites where Q-Med currently conducts business.
The Offer
Ivytan offers SEK 39 in cash for each share in Q-Med. The Offer Price is subject to adjustment should Q-Med pay any dividend or make any other value distribution to the shareholders prior to the settlement of the Offer by reduction of an amount corresponding to the dividend or value distribution per share.
No commission will be charged in connection with the Offer.
The Offer represents a premium of:
· 40 per cent relative to the volume weighted average share price during the last month ending 31 October, 2008;
· 37 per cent relative to the volume weighted average share price since the interim report on 24 October, 2008;
· 28 per cent relative to the volume weighted average share price during the last three months ending 31 October, 2008; and
· 24 per cent relative to the closing share price on 31 October, 2008, which was the last trading day prior to announcement of the Offer.
The Offer values the share capital of Q-Med at approximately SEK 3.9 billion.
Ivytan does not currently own or control any shares in Q-Med, apart from the shares held by Lyftet.[3] Neither Ivytan, EQT nor Lyftet have acquired shares in Q-Med within the six months prior to the announcement of the Offer.
The Offer will be financed by equity, shareholder loans and bank debt. Ivytan has entered binding credit agreements for the debt financing (see Description of Ivytan and its financing below).
Ågerup’s shareholding in Q-Med
Ågerup controls, indirectly and through companies, 47.5 per cent of the capital and votes in Q-Med and is the Company’s largest shareholder. Ågerup has agreed to ensure that the shares he controls are transferred into Ivytan, if the Offer is completed. The transferred shares are valued at the Offer Price. Further, Ågerup has committed not to engage with any other offeror during the next twelve months.
The Board of Directors of Q-Med
Ivytan has during the weekend informed Q-Med’s Board of Directors regarding the Offer.
Certain related party information
Ågerup is a member of the Board of Directors and CEO of Q-Med. Ågerup has not participated in the Board of Directors’ of Q-Med handling of the Offer.
Conditions to the Offer
Completion of the Offer is conditional upon:
(i) that the Offer is accepted to the extent that Ivytan becomes the owner of more than 90 per cent of the total number of shares in Q-Med;
(ii) that, with respect to the Offer and the acquisition of Q-Med, all necessary regulatory, governmental or similar clearances, approvals and decisions from relevant authorities and bodies, including competition authorities, have been received on terms which, in Ivytan’s opinion, are acceptable;
(iii) that Ivytan, save as publicly announced by Q-Med prior to the date the Offer was announced, does not discover that any information publicly disclosed by Q-Med is materially inaccurate or misleading or that any material information which should have been publicly disclosed by Q-Med has not been so disclosed prior to the date the Offer was announced;
(iv) that neither the Offer nor the acquisition of Q-Med, is wholly or partly prevented or materially adversely affected by any legislation or other regulation, court decision, public authority decision or similar circumstance, which is actual or could reasonably be anticipated, outside the control of Ivytan and which Ivytan could not reasonably have foreseen at the time of the announcement of the Offer;
(v) that no circumstances, which Ivytan did not have knowledge of at the time of the announcement of the Offer, have occurred that have or could reasonably be expected to have a material adverse effect upon Q-Med’s sales, results, liquidity or equity;
(vi) that Q-Med does not engage in any actions that are typically aimed at worsening the conditions for the successful completion of the Offer;
(vii) that disbursement is made in accordance with Ivytan’s financing commitments arranged and led by Nordea Bank AB (publ) (“Nordea”) (see Description of Ivytan and its financing below); and
(viii) that no other party announces an offer to acquire shares in Q-Med on terms more favorable to the Q-Med shareholders than the Offer.
Ivytan reserves the right to withdraw the Offer in the event that it is clear that any of the above conditions are not fulfilled or cannot be fulfilled. However, with regard to conditions (ii) – (vii), such withdrawal will only be made provided that the lack of fulfillment of such condition is of material importance to Ivytan’s acquisition of shares in Q-Med.
Ivytan reserves the right to waive, in whole or in part, one or more of the conditions above, in accordance with applicable laws, rules and regulations including, with respect to condition (i) above, to complete the Offer at a lower level of acceptance.
Description of Ivytan and its financing
Ivytan[4] is indirectly owned by EQT V (approximately 50.1 per cent) and Lyftet, a company controlled by Ågerup, (approximately 49.9 per cent). Ivytan’s corporate registration number is 556735-0151, the company is domiciled in Stockholm and its address is c/o Advokatfirman Vinge KB, Box 1703, 111 87 Stockholm, Sweden. Ivytan was founded on 25 June, 2007 and registered with the Swedish Companies Registration Office (Bolagsverket) on 18 July, 2007. Ivytan has never conducted and at present does not conduct any business and its sole business purpose is to make the Offer and take all actions to finance and complete the Offer and operate as parent company of Q-Med.
Ivytan has entered into binding financing commitments, consisting of equity and shareholder loans from its shareholders as well as debt facilities. The debt facilities are arranged and made available by a bank consortium led by Nordea.
Drawdown pursuant to the credit commitment is subject to the conditions for the Offer being satisfied or waived (where such waiver requires consent from the Lenders in certain circumstances, including any waiver of or lowering of the 90 per cent condition threshold). Besides the aforementioned, the credit commitment does not include any conditions relating to Q-Med or Q-Med’s business and is otherwise subject only to conditions which Ivytan and its owners in practice control, and to limited other conditions (such as it not becoming illegal for the Lenders to provide funding, and the loan documentation remaining legal and binding), which are customary for a credit of this kind.
The conditions to drawdown which Ivytan and its owners in practice control, and which Ivytan thus cannot invoke in relation to the Offer, materially relate to:
· that Ivytan is capitalised by its shareholders with agreed equity and shareholder loans (such capitalisation being subject to the bank credit being available for drawdown) and that its current shareholders continue to control Ivytan;
· that Ivytan acts in compliance with the Offer and laws and regulations relating to the Offer;
· that Ivytan perfects the agreed pledge to the banks over the shares acquired in Q-Med; and
· that Ivytan is not in breach of any of certain limited key obligations under the loan documentation (including that Ivytan is not insolvent or repudiating its obligations).
In Ivytan’s opinion, the conditions to drawdown which Ivytan and its owners in practice control will be met, due to, among other things, the fact that Ivytan at present does not conduct any business and has been established only for the purpose of the Offer and the financing and completion thereof, and further due to Ivytan’s general duty under the Offer to take appropriate measures in order to satisfy all conditions within its control.
Compulsory purchase and de-listing
As soon as possible following Ivytan’s acquisition of shares representing more than 90 per cent of the shares in Q-Med, Ivytan intends to call for compulsory purchase of the then outstanding shares in Q-Med. In connection hereto, Ivytan intends to de-list the Q-Med share from OMX.
Indicative timetable
An offer document regarding the Offer is expected to be made public on or about 11 November, 2008 and will be distributed to the shareholders in Q-Med in connection therewith. The acceptance period for the Offer is expected to commence on or about 12 November, 2008 and end on or about 2 December, 2008. Settlement will be commenced as soon as possible thereafter. Ivytan reserves the right to extend the acceptance period, as well as to postpone the settlement date (payment to shareholders).
The acquisition of Q-Med requires clearance from the relevant competition authorities. The necessary clearances are expected to be received by the end of the acceptance period and the Offer is expected to be completed shortly after the expiration of the acceptance period.
Advisers
Deutsche Bank AG, London Branch (“Deutsche Bank”) and Nordea Corporate Finance are acting as financial advisers and Advokatfirman Vinge KB as legal adviser to Ivytan in connection with the Offer.
Applicable law and disputes etc.
The Offer, as well as the agreements entered into between Ivytan and the shareholders in Q-Med as a result of the Offer, shall be governed by and construed in accordance with substantive Swedish law. Disputes relating to the Offer shall be subject to the exclusive jurisdiction of the Swedish courts, of which the Stockholm City Court shall be the court of first instance.
Ivytan has, in accordance with the Swedish Act on Public Takeover Offers (Sw. lag om offentliga uppköpserbjudanden på aktiemarknaden, 2006:451), on 31 October, 2008 undertaken to OMX, and hereby undertakes to the shareholders in Q-Med, to comply with OMX’s Rules Regarding Takeover Offers (the “Takeover Rules”), including the rules regarding management buy-outs, and the Swedish Securities Council’s rulings regarding interpretation and application of the Takeover Rules, including, where applicable, its rulings with respect to the formerly applicable Rules on Public Offers for the Acquisition of Shares issued by the Swedish Industry and Commerce Stock Exchange Committee, and to submit to the sanctions which OMX may impose in the event of breach of the Takeover Rules. Ivytan has on 3 November, 2008 informed the Swedish Financial Supervisory Authority (Sw. Finansinspektionen) about the above undertaking towards OMX.
The Offer is not being made to persons whose participation in the Offer requires that any additional offer document is prepared or registration effected or that any other measures are taken in addition to those required under Swedish law. This press release and any documentation relating to the Offer are not being distributed and must not be mailed or otherwise distributed or sent in or into any country in which the distribution or offering would require any such additional measures to be taken or would be in conflict with any law or regulation in such country – any such action will not be permitted or sanctioned by Ivytan. Any purported acceptance of the Offer resulting directly or indirectly from a violation of these restrictions may be disregarded.
The Offer is not being made, directly or indirectly, in or into Australia, Canada, Japan, New Zealand, South Africa or the United States of America by use of mail or any other means or instrumentality (including, without limitation, facsimile transmission, electronic mail, telex, telephone and the Internet) of interstate or foreign commerce, or of any facility of national security exchange, of Australia, Canada, Japan, New Zealand, South Africa or the United States of America, and the Offer cannot be accepted by any such use, means, instrumentality or facility of, or from within, Australia, Canada, Japan, New Zealand, South Africa or the United States of America. Accordingly, this press release and any documentation relating to the Offer are not being and should not be mailed or otherwise distributed, forwarded or sent into Australia, Canada, Japan, New Zealand, South Africa or the United States of America. Ivytan will not deliver any consideration from the Offer into Australia, Canada, Japan, New Zealand, South Africa or the United States of America.
Statements in this press release relating to future status or circumstances, including statements regarding future performance, growth and other trend projections and the other benefits of the Offer, are forward-looking statements. These statements may generally, but not always, be identified by the use of words such as “anticipates”, “intends”, “expects”, “believes”, or similar expressions. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There can be no assurance that actual results will not differ materially from those expressed or implied by these forward-looking statements due to many factors, many of which are outside the control of Ivytan and Q-Med, including the effect of changes in general economic conditions, the level of interest rates, fluctuations in product demand, competition, technological change, employee relations, planning and property regulations, natural disasters and the potential need for increased capital expenditure (such as that resulting from increased demand, new business opportunities and deployment of new technologies).
Deutsche Bank and Nordea Corporate Finance are acting as financial advisers to Ivytan, and no one else, in connection with the Offer and will not be responsible to anyone other than Ivytan for providing the protections afforded to clients of Deutsche Bank and Nordea nor for providing advice in relation to the Offer. The information herein has been provided by Ivytan. Deutsche Bank and Nordea Corporate Finance have not assumed any obligation to independently verify, and disclaims any liability with respect to, information herein.
Stockholm, 3 November, 2008
Ivytan AB
The Board of Directors
Press conference
A press conference in Swedish will take place today, 3 November, at hotel Scandic Anglais, Humlegårdsgatan 23 in Stockholm, at 10.00 (CET). It is possible to listen to the press conference by calling +46-8-505 202 70. The presentation will be available at www.eqt.se shortly before the press conference commences.
For questions, please contact:
Caspar Callerström, partner, EQT Partners
+46-8-506 55 300
Johan Hähnel, PR & Communications, EQT Partners
+46-70-605 63 34
For additional information on the Offer, please visit www.eqt.se or contact Nordea at telephone +46-8-678 04 80.
EQT in brief
EQT is a leading private equity group with operations in Northern Europe, Eastern Europe, USA and China. EQT manages funds active within buy-outs and growth financing. EQT has a unique industrial approach and a strong record of successful investments.
EQT’s funds mainly acquire or finance medium-sized companies with strong market positions and considerable growth potential. EQT also has a fund for companies with sound core businesses and clear value potential, but that are in need of restructuring.
EQT acts as a catalyst for change in the companies that the funds invest in. The companies develop into market leading actors through genuine and sustainable operational improvements. EQT has since its foundation in 1994 raised approximately EUR 11 billion in 11 funds, which have invested approximately EUR 7 billion in 70 companies.
Since EQT’s first acquisition in 1995, the average annual growth in its portfolio companies has been 13 per cent, the number of employees has increased by 12 per cent and earnings by 20 per cent annually. More than 90 per cent of the value creation is attributable to growth, strategic repositioning and increased earnings.
EQT Partners AB is adviser to all EQT funds and has approximately 100 investment professionals with an extensive industrial and financial competence. EQT Partners AB has offices in Stockholm, Copenhagen, Helsinki, Oslo, Munich, Frankfurt, Hong Kong, Shanghai, Warsaw, Zurich and New York.
Q-Med in brief
Q-Med is a rapidly growing and profitable biotechnology/medical device group that develops, manufactures, markets and sells primarily medical implants. Most of the products are based on the Company's patented technology, NASHA™, for the production of stabilised non-animal hyaluronic acid.
Q-Med has more than 700 employees in 20 countries, of which approximately 500 work at the Company's head office and production facility in Uppsala. Q-Med had sales of SEK 1,318 million in 2007.
The Company is listed on OMX, Nordic List, Mid Cap.
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[1] Relative to the volume weighted average share price for the Q-Med share during the last month ending 31 October.
[2] This amount is subject to adjustment should Q-Med pay any dividend or make any other value distribution to the shareholders prior to the settlement of the Offer. An adjustment to the Offer Price would be of an amount equal to the dividend or value distribution per share.
[3] In total, Ivytan hereby controls 47,187,340 shares, corresponding to 47.5 per cent of the capital and votes in Q-Med.
[4] Subject to change of name from Lagrummet April nr 79 Aktiebolag.