Medical diagnostics provider Sonic Healthcare [ASX:SHL] has made the decision to invest $17.8 million into precision microbiome tech company Microba for a deal that would see it acquire a 19.99% stake in the company.
Sonic also revealed that it would be seeking further options to the extent of a further 5% equity position. The bonus stake would set Sonic back a further $7.5 million.
While Sonic’s shareholders have been reserved in the share market today, there has not been much improvement in the company’s performance this past year.
The SHL share price has dropped 32% year to date and is 19% down within its own sector over the past full year:
Sonic Healthcare secures commercial partnership with Microba
Sonic will be forking out $17.8 million for a 19.99% equity holding in microbiome company Microba Life Sciences.
The investment represents 26 cents per share in Microba, which Sonic has deemed a fair price to pay to gain a ‘strategic shareholding’ in the testing company.
In fact, Sonic has expressed an interest in acquiring further options to acquire another 5% stake in the company at 33 cents per share — this bonus portion is expected to cost another $7.5 million.
This, however, is a decision that is yet to pass shareholder approval.
The 20% stake in Microba will be through the issue of fully-paid new ordinary shares, the 26-cent price per share representing a 25% premium to the five-day VWAP (volume weighted average price) of Microba’s share price the previous day.
The extra options, pertaining to the further 5% stake, would be priced at a 58% premium to the five-day VWAP of Microba shares.
Sonic’s CEO, Dr Colin Goldschmidt, reflected on the deal:
‘Sonic Healthcare prides itself on delivering accurate, reliable medical diagnostics services using leading laboratory and informatics technologies. Our partnership with Microba exemplifies our commitment to invest in cutting edge developments in laboratory medicine. We see microbiome testing becoming a key part of pathology over coming years and are excited about the potential of this partnership and the opportunities that Microba’s technology will provide for Sonic’s global operations, our referring clinicians, and our patients.’
The partnership between Microba and Sonic includes initial binding terms to see the delivery of Microba’s microbiome testing technology into Australia, Germany, the UK, Switzerland, the US, NZ, and Belgium.
The deal stands to benefit Microba by increasing its addressable market through distribution across Sonic’s global network of healthcare professionals.
By the end of FY22, Sonic generated revenue of $9.3 billion, and the company boasts a position as ‘one of the world’s largest medical diagnostics companies’ that employs more than 41,000 people.
With that in mind, Microba appears to find itself in a favourable position as it looks to advance its microbiome therapeutics and testing on a wider, global scale — something Sonic offers to facilitate.
Sonic is even offering up its own Chief Medical Officer, Dr Stephen Fairy, who will be joining Microba’s Medical Advisory Board.
Dr Luke Reid, Microba’s CEO, shared his thoughts:
‘We are excited to have Sonic Healthcare, a global leader in healthcare, become a major strategic shareholder and partner. Sonic is globally respected for its leadership in delivering trusted medical diagnostic services, and our partnership deeply aligns the interests of both companies to bring microbiome testing and therapeutics into the hands of clinicians and patients globally to improve standard of care.
‘This strategic partnership with Sonic is set to accelerate international distribution of Microba’s microbiome testing into primary and specialist healthcare, and move our testing deeper into routine patient management.’
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