ABCAM PLC Entry into Definitive Agreement to Acquire Epitomics International Inc

Abcam plc (AIM: ABC), a global leader in the supply of protein research tools, today announces that it has entered into a definitive agreement to acquire the entire issued share capital of Epitomics International Inc ("Epitomics"), an antibody business headquartered in San Francisco, California, with operations in China, for gross consideration of US$170.0 million (the "Acquisition"). At completion Epitomics is expected to have net cash of US$15.0 million resulting in net consideration for the Acquisition of US$155.0 million.

Terms of the Acquisition

§ Proposed Acquisition of Epitomics, an antibody business headquartered in San Francisco, California, with operations in China, for net consideration of US$155.0 million (reflecting net cash on Epitomics's balance sheet). The net consideration of US$155.0 million is payable 50 per cent. (US$77.5 million) in cash and 50 per cent. (US$77.5 million) in new Abcam shares (representing approximately 14.5 million new Abcam shares equating to approximately 7.3 per cent. of Abcam's enlarged issued share capital). The new Abcam shares will be subject to a lock-up on resale that expires six months after the tender offer closes and on other restrictions on resale imposed by U.S. securities laws.

• The Acquisition is expected to close in approximately one to two months' time.
• Abcam has formed a series of  acquisition subsidiaries for the purpose of commencing a tender offer to purchase all outstanding Epitomics shares for a combination of cash and Abcam ordinary shares (and in the case of certain Epitomics shareholders, for cash only).  Following the completion of the tender offer, Abcam expects to consummate a series of mergers between Epitomics and these acquisition subsidiaries whereby any Epitomics shares that have not been purchased in the tender offer will be acquired for cash consideration.
• Completion of the Acquisition is subject to a number of customary closing conditions set forth in the definitive agreement for the Acquisition, including the acquisition by Abcam, through one of its acquisition subsidiaries, of at least 90 per cent. of Epitomics's fully diluted shares in the tender offer. In connection with entering into the definitive acquisition agreement, Abcam received irrevocable undertakings from Epitomics's principal shareholders and management to tender in the offer approximately 80 per cent. of the issued share capital of Epitomics.
• New £20.0 million revolving credit facility put in place to part fund the Acquisition.
• Abcam and Epitomics have agreed to a US$10.0 million mutual break fee payable in certain circumstances if the Acquisition does not complete.

Description of Epitomics

Epitomics is focused on the development, production and distribution of rabbit monoclonal antibodies ("RabMAbs®")

for biomedical research and diagnostic applications. It has over 250 employees globally, with approximately 80 based in San Francisco in the US, focused primarily on antibody distribution and diagnostic operations, and approximately 170 in Hangzhou, China, focused on antibody development and production. It has three core business units: Reagents (Antibodies), Custom Antibodies and In Vitro Diagnostics ("IVD").

(i) Reagents (Antibodies) - develops and distributes rabbit monoclonal antibodies for academic and pharmaceutical research applications. Epitomics currently has approximately 3,200 RabMAbs® in its catalogue having developed and added over 900 new RabMAbs® in 2011. 

(ii) Custom Antibodies - develops RabMAbs® to address customers' specific needs where catalogue antibodies are not suitable. It provides solutions for research and diagnostic applications.

(iii) IVD - provides RabMAbs® primarily for clinical diagnosis and prognosis of certain cancers including colon, prostate, ovarian and lymphoma.

Additionally, Epitomics generates income from certain royalty payments and licence deals that it has with life science tools companies that pay to utilise aspects of Epitomics's patented RabMAb® technology in the development and manufacture of their own rabbit monoclonal antibodies.

Purpose and Effect of Acquisition

Epitomics represents a highly compelling strategic fit for Abcam and supports the Company's vision of becoming the world's leading life science tools company. The Acquisition will provide Abcam with extensive know-how in rabbit monoclonal antibody technology and will help to diversify Abcam's product offering and customer base. Epitomics will also provide Abcam with a custom antibody service offering and a high quality entry-point to the fast growing IVD market. Epitomics's strong historic and forecast growth and high margins (annual compound growth in reported revenues of 31% over the past five financial years and an historic gross margin in excess of 80%) are projected to boost Abcam's future sales growth and margins, helping to enhance Abcam's position of high growth. Abcam intends to leverage its existing customer base and strong global marketing and distribution expertise with Epitomics's rabbit monoclonal products, technology and product pipeline.

The Acquisition is expected to be earnings neutral in the first full year of ownership as the Company invests in the business to expand production and accelerate growth. The Acquisition is expected to be earnings enhancing in the second full year of ownership. In the year ended 31 December 2011 Epitomics had unaudited revenues of US$24.7 million, EBITDA of US$7.6 million and profit before tax of US$6.8 million. At 31 December 2011 Epitomics had net assets of approximately US$30.0 million.

The Abcam shares to be issued in the tender offer have not been registered under the U.S. Securities Act of 1933, as amended (the "Securities Act") or any state securities laws and may not be offered or sold in the United States absent a registration statement or an applicable exemption from the registration requirements of the Securities Act and any applicable state securities laws.

This RNS announcement is being issued pursuant to Rule 135c of the Securities Act as well as the United Kingdom's AIM Rules for Companies, and does not constitute an offer to sell or the solicitation of any offer to buy any security.