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ALS to take full ownership and control of Nuvisan
ALS Limited (ASX: ALQ) has agreed with Nuvisan Pharma Holding GmbH (Nuvisan), to acquire the remaining 51% interest in Nuvisan (which includes Nuvisan GmbH and Innovation Campus Berlin (ICB)) at nil cost. Nuvisan is a European-based contract research organization (CRO). It has two distinct and separable entities, Nuvisan GmbH focused on pre-clinical and clinical development services, and ICB focused on drug discovery services. Nuvisan generated revenues of ~A$245 million in calendar 2023. The transaction is effective 31 March 2024 for financial reporting purposes.
Strategic rationale
Following a strategic review of Nuvisan, ALS has determined that taking full control and ownership of Nuvisan provides the best opportunity to deliver earnings growth and maximum shareholder value optionality. The total acquisition price paid is attractive and timely for a European-based CRO. Nuvisan is expected to benefit from any potential market recovery, which is supported by expected long-term demand tailwinds in this sector.
Nuvisan will deliver a strategic footprint for ALS in Western Europe and a platform that enables access to the growing global pharmaceutical market, complementing ALS’ existing pharmaceutical businesses. It also extends and enhances existing capabilities and leverages the geographical footprint and client network. The ICB business is expected to benefit from revenue growth and cost rationalisation associated with the transformation program, outlined below.
Fair value adjustment
As required by accounting standards, a fair value adjustment process for the initial 49% investment carrying value has commenced and will be disclosed in the FY24 Financial Report released in May 2024. This process is expected to result in a write down of the majority of the existing carrying value. Book value as at March 2023 was approximately A$258 million.
Transformation program
With full ownership of Nuvisan, ALS will implement its transformation program to increase revenue from targeted investment in business development, and improve profitability across both businesses. The transformation program will focus on operational improvements and efficiencies, cost rationalization across facilities, and a re-focused business development agenda on core portfolio services.
The estimated restructuring costs associated with the program are ~€20 million over a two-year period, funded by existing liquidity and improved profitability within the business. The program is expected to deliver annual cost savings of ~€25 million. Most restructuring costs and annual cost savings are expected to materialise within the ICB business. The transformation project is expected to commence in mid calendar year 2024 and conclude in 2026.
Timing
The acquisition will be reflected in the ALS Financial Statements as at 31 March 2024, with trading results to commence from 1 April 2024.
CEO and Managing Director, Malcolm Deane, commented: “Taking full ownership of Nuvisan is a significant step forward in our Life Sciences strategy, providing us access to an attractive market with growth opportunities and further development of our Pharmaceutical platform. From its well-established base in Germany and France, Nuvisan is a wellregarded European CRO known for its quality, client reputation and service offering. Its CRO services complement ALS’ existing analytical testing capabilities and are well aligned with the Beauty & Personal Care business. The Nuvisan alsglobal.com business will undergo a two-year transformation program to drive sales growth in key markets and implement cost reduction measures to improve profitability. “The management team are committed to improving Nuvisan’s financial performance under our stewardship and expect to deliver overall project returns of low to mid-teens in the medium to longer term.” A copy of the presentation, the webcast and conference call details can be found here.
Trading update
ALS takes the opportunity to confirm that FY24 underlying NPAT guidance for the financial year ending 31 March 2024, will be at the lower end of the previously stated targeted range of between= $310-$325 million. Divisionally, Minerals margins have been maintained despite subdued trading through December 2023 and January 2024. Life Sciences has traded as expected. Corporate and interest costs are to be slightly higher.
Approved for release by the Board of Directors.
For further information please contact:
Cameron Sinclair
Head of Investor Relations
ALS Limited
+61 412 430 393
Cameron Sinclair
Head of Investor Relations
ALS Limited
+61 412 430 393
About ALS Limited
A global leader in testing, ALS provides comprehensive testing solutions to clients in a wide range of industries around the world. Using state-of-the-art technologies and innovative methodologies, our dedicated international teams deliver highest-quality testing services and personalized solutions supported by local expertise. We help our clients leverage the power of data-driven insights for a safer and healthier world.
A global leader in testing, ALS provides comprehensive testing solutions to clients in a wide range of industries around the world. Using state-of-the-art technologies and innovative methodologies, our dedicated international teams deliver highest-quality testing services and personalized solutions supported by local expertise. We help our clients leverage the power of data-driven insights for a safer and healthier world.