Perth-based health care equipment company Medec Ltd has inked a $5 million deal to take a controlling interest in Singapore health and wellness group,Body Contours Pty Ltd.
Perth-based health care equipment company Medec Ltd has inked a $5 million deal to take a controlling interest in Singapore health and wellness group,Body Contours Pty Ltd.
The heads of agreement will see Medec acquire 51 per cent of Body Contours, with an option to increase its holding to 87.75 per cent.
This is Medec's second acquisition in Asia in the last three months, after acquiring a 60 per cent stake in a Chinese manufacturing company, and comes after it announced plans to raise $1.8 million, last month to help fund future European growth.
Medec will make 50 per cent on the payment amount on completion of the acquisition, expected to be July 1, and the balance will be due in 2009 and can be made at the discretion of Medec in cash or Medec shares (at a value of $0.30 per share).
It has an option to acquire a further 36.75 per cent stake in Body Contours, between December 31 2007 and June 30 2009.
Medec has also invited Body Contours founder, Ananda Rajah to take up a position on the Medec board.
Body Contours has been operating for 10 years and offers a range of weight management and complementary health and wellness therapies.
It currently operates five centres, which includes a spa in the prestigious Raffles Town Club plus one retail outlet and has franchising plans and agreements in place to expand into India, Malaysia and Australia.
Medec believes its latest acquisition will provide synergies, as both companies have a similar target market, and existing infrastructure can be used for the roll out of Medec products and services.
The Body Contours deal also gives Medec a toe-hold into the massive South East Asia and India markets.
Body Contours 2005 calendar year revenue was $9.2 million, with further growth expected in 2006.
Last month Medec announced plans to raise $1.8 million to help it pursue future acquisitions in Europe.
Medec chief executive Josef Plattner said at the time that the target group of international investors was well connected in the European health care, wellness and fitness industry, and that he expected their support as Medec attempts to grow it European operations.
Medec listed on the Australian Stock Exchange in October 2003, and its shares are also traded on the German Stock Exchange - having listed there in February 2005.
Its major Market is Europe, and it has 15 international distributors that display the company's products.
THE FULL ASX/MEDIA RELEASE APPEARS BELOW
MEDEC to Acquire Leading Singapore Wellness and Health Care Provider
12 May 2006 - Perth based health care equipment company MEDEC Limited [ASX: MAA] has signed a Heads of Agreement to acquire 51% of Body Contours Pte Ltd of Singapore with options to increase the shareholding to 87.75%.
This is MEDEC's second acquisition in Asia within the last 3 month after acquiring a 60 % shareholding in a manufacturing company in Southern China.
Body Contours is a well established Singapore business which has been operating for 10 years and offers premium services, including a wide range of weight management and complementary health and wellness therapies. It currently operates 5 centres, which includes a spa in the prestigious Raffles Town Club plus 1 retail outlet and has franchising plans and agreements in place to expand into India, Malaysia and Australia.
Highlights of the Body Contours Pte Ltd acquisition:
- High synergy acquisition - both companies target the same client base
- Existing infrastructure for the roll out of MEDEC products and services
- Profitable and growing cash flow business with international expansion into South East Asia and India
- Basis for MEDEC for the establishment of MEDEC South East Asia and India
Revenue of Body Contours for the 2005 calendar year was S$10.9 million (A$9.2 million) with further growth expected in 2006.
MEDEC will acquire 51.0 % of Body Contours from the current shareholders for a consideration of A$5,062,872 with payment as follows:
50% payment is due on completion of acquisition (target date is 1 July 2006) for A$316,430 in cash plus fully paid MEDEC shares at a value of $0.30 per share.
The balance of payment of A$2.5 million is due in 2009 following the audited financial statements to the 30 June 2009 and can be made at the discretion of MEDEC in cash or in fully paid MEDEC shares at a value of $0.30 per share..
The vendors guarantee an average EBITDA of S$2.0 million per year to be achieved over the next 3 years. If Body Contours does not achieve this then the valuation of Body Contours is reduced and the second tranche of payment will be adjusted accordingly. No adjustment is made if the average EBITDA exceeds S$2m.
MEDEC has an option to acquire a further 36.75% of the share capital of Body Contours between 31 December 2007 and 30 June 2009 payable at the discretion of MEDEC in cash or fully paid MEDEC shares. The acquisition is subject to due diligence and completion of all legal documentation and approval of shareholders for the issue of MEDEC shares which is planned to be achieved by 30 June 2006.
The MEDEC Board has invited the founder of Body Contours, Mr. Ananda Rajah to a seat on the board of directors of MEDEC.
Body Contours will have the exclusive distribution rights for all MEDEC group products and services in Singapore, Malaysia, Indonesia, Vietnam, Thailand, Sri Lanka and India.
"This acquisition is a further step towards building a substantial international retail network and it strengthens MEDEC's Asian base in management, administration, logistics and sales," said Mr Josef A. Plattner, CEO of MEDEC. "This is a high synergy acquisition that will improve MEDEC's brand recognition in Asia and help to position MEDEC as a supplier of technologically advanced products and services for the health care industry. Most of all it will double MEDEC's revenue and income well beyond the estimated break even point of $12 million per year underpinning the profitability of the group".
"This acquisition is a further deliberate expansion of MEDEC into providing MEDEC products and services directly to the public via a network of Health Care service and retail outlets both corporately owned or franchised", says Gordon Getley, Chairman of MEDEC Ltd. "This follows the trend which we commenced 12 month ago with co-operations with the German Bodycure and Figurewell franchise companies."
"We are confident that MEDEC products and technology will help us to retain the position as market leader in Singapore and to increase our business further, particularly in the growing weight management market" says Mrs. Pushpa Tulsidas, Managing Director of the Body Contours Group. "We plan to establish MEDEC / Athlegen showrooms and a Bodycure Weight Coaching Centre in Singapore within the next 3 months".
"I am looking forward to establishing MEDEC and Body Contours products and services in the region", says Mr. Ananda Rajah Ratnam, the founder of Body Contours. "I have personally and professionally used MEDEC products for the past 3 years and have experienced its benefits. I have taken MEDEC shares for the first tranche payment as I believe that MEDEC products and technology will be well received in Asia and particularly in India".
For further Information refer to www.medec.com.au, www.caloriefit.info, www.eaglemasterent.com and www.bodycontours.com.sg or inquire under marion@medec.com.au
Josef Plattner
Chief Executive Officer
+61 (0)8 9450 7411
