RNS Number:2387H
Gyrus Group PLC
14 March 2000
NOT FOR RELEASE, DISTRIBUTION, OR PUBLICATION IN OR INTO THE UNITED STATES,
CANADA, AUSTRALIA, THE REPUBLIC OF IRELAND OR JAPAN
GYRUS GROUP PLC ("Gyrus" or the "Company")
PROPOSED PLACING AND OPEN OFFER IN CONNECTION WITH ACQUISITION OF EVEREST
MEDICAL CORPORATION ("Everest")
Highlights
* Gyrus is raising #45 million by way of a placing and open offer of
12,907,447 new ordinary shares of Gyrus at a placing price of 350p per share.
The placing has been fully underwritten by Nomura International plc.
* The proceeds will be used to fund the cost of the acquisition of Everest,
the associated expenses and to accelerate technology development for the
Enlarged Group.
* Qualifying shareholders will be given the opportunity to apply under the
Open Offer for New Shares at the Placing Price, free of expenses, pro rata to
their existing holding of Gyrus shares on 3 March 2000, on the following
basis:
19 New Shares for every 46 Gyrus shares
* The Directors have been informed that Johnson & Johnson Development
Corporation has, as part of its normal investment cycle, sold 2,866,217 Gyrus
shares to various independent institutional investors at the Placing Price.
* As a result of the sale, Johnson & Johnson Development Corporation will own
less than 3 per cent. of the Gyrus shares in issue following the Placing and
Open Offer.
* Both operating companies of Johnson & Johnson, Mitek Products and Gynecare,
Inc., remain fully committed to Gyrus' technologies.
Enquiries:
Gyrus Group PLC
Dr Mark Goble, Managing Director
John Bradshaw, Finance Director
Analyst, broker and shareholder enquiries
Tel: 01222 300100
Fax:: 01222 300101
Email: john.bradshaw@Gyrus.co.uk
Nomura International plc
David Porter, Head of Healthcare Corporate Finance
Charles Spicer, Director, Healthcare Corporate Finance
Tel: 0171 521 2000
Fax:: 0171 521 3699
Email: charles.spicer@nomura.co.uk
Jean Garon PR
Press enquiries
Tel: 01628 483040
Mobile: 0836 227446
Fax:: 01628 486796
Email: jean@garonpr.demon.co.uk
Exchange rate used in this press release: #1: US$ 1.58
GYRUS GROUP PLC
("Gyrus" or the "Company")
PROPOSED PLACING AND OPEN OFFER IN CONNECTION WITH ACQUISITION OF EVEREST
MEDICAL CORPORATION ("Everest")
INTRODUCTION
On 23 February 2000, the boards of Gyrus and Everest announced that they had
signed a merger agreement (the "Merger Agreement") whereby Gyrus would acquire
Everest in a transaction that values Everest (on a fully diluted basis) at
approximately $51.65 million (approximately #32.69 million) (the
"Acquisition").
To fund the cost of the Acquisition and the associated expenses, to accelerate
technology development for the Enlarged Group and increase expenditure on
sales and marketing, Gyrus is raising #45 million by way of a placing and open
offer of 12,907,447 new ordinary shares of Gyrus (the "New Shares") at a
placing price of 350p per share (the "Placing Price"). The placing has been
fully underwritten by Nomura International plc ("Nomura").
Following the Acquisition, Gyrus will have a market capitalisation of
approximately #163 million, based on the closing price of 381p on the London
Stock Exchange of Gyrus shares on 13 March 2000, the latest practical date
prior to publication of this press release, the number of New Shares and the
Placing Price.
Because of its size, the Acquisition is conditional, inter alia, upon the
approval of Gyrus shareholders. Accordingly, an Extraordinary General Meeting
has been convened for 6 April 2000 at 10.00 a.m. at which the approval of
Gyrus shareholders will be sought, inter alia, to approve the Acquisition and
to give the Directors requisite authority to proceed with the placing and open
offer as described below.
The Directors have been informed that Johnson & Johnson Development
Corporation has, as part of its normal investment cycle, sold 2,866,217 Gyrus
shares to various independent institutional investors at the Placing Price.
As a result of the sale, Johnson & Johnson Development Corporation will own
less than 3 per cent. of the Gyrus shares in issue following the Placing and
Open Offer.
Both operating companies of Johnson & Johnson, Mitek Products and Gynecare,
Inc., remain fully committed to Gyrus' technologies, as is demonstrated by the
$6 million Key Growth Projects Agreement and the ongoing development
investment in the VersaPoint product range.
The placing and open offer (the "Placing and Open Offer")
The Company is proposing to raise #45 million (approximately #43 million after
expenses of the Placing and Open Offer) by the issue of 12,907,447 New Shares
at the Placing Price. Under a placing agreement (the Placing Agreement"),
Nomura has agreed to use its reasonable endeavours to place the New Shares at
the Placing Price or, failing which, itself to subscribe for the New Shares,
subject to clawback to satisfy valid applications under the Open Offer by
qualifying Gyrus shareholders (excluding certain overseas shareholders).
Qualifying Gyrus shareholders are being offered New Shares at the Placing
Price, free of expenses, pro rata to their existing holding of Gyrus Shares on
3 March 2000 (the "Record Date"), on the following basis:
19 New Shares for every 46 Gyrus shares.
Fractional entitlements to New Shares will not be allocated but will be
disregarded and entitlements rounded down to the nearest whole number of New
Shares. Any fractional entitlement that would otherwise have arisen will be
aggregated and issued under the Placing for the benefit of the Company.
The Placing and the Open Offer are conditional, inter alia, upon the Placing
Agreement having become unconditional and not having been terminated in
accordance with its terms. These conditions include, inter alia, the Merger
Agreement becoming unconditional, Gyrus shareholders approving the Acquisition
at the Extraordinary General Meeting and the New Shares being admitted to the
Official List. If the conditions of the Placing Agreement are not fulfilled
on or before the relevant time and date specified in the Placing Agreement,
application monies are expected to be returned to applicants (at the
applicant's risk), without interest, within 14 days thereafter.
The New Shares will, when issued and fully paid, rank pari passu in all
respects with the existing issued ordinary Gyrus shares. Application has been
made for the New Shares to be admitted to the Official List and it is expected
that such admission will become effective and that dealings in the New Shares
will commence on 17 April 2000.
The latest time for receipt of completed application forms and payment in full
is 3.00 p.m. on Friday 14 April.
A circular to Gyrus shareholders, comprising a prospectus and containing
details of the Acquisition and the Placing and Open Offer is being posted
today together with an application form to apply for New Shares under the Open
Offer. The circular also contains a notice convening the Extraordinary
General Meeting referred to above.
Application forms are personal to shareholders and may not be transferred
except to satisfy bone fide market claims.
BACKGROUND TO AND BENEFITS OF THE ACQUISITION
Gyrus and Everest are both acknowledged leaders in bipolar RF technologies for
the minimal access surgery markets. Gyrus has to date concentrated on the
arthroscopic, hysteroscopic and urology markets. Everest has developed a
strong reputation in the laparoscopic, minimal access cardiac surgery and
gastroenterology markets. Both companies commercialise their products using a
mix of licence agreements, corporate partnerships and direct sales. Gyrus has
direct European sales of own-branded products in urology while Everest has
direct US sales of own-branded products primarily in the laparoscopic market.
* Everest is a leader in design, development, manufacture and marketing of
advanced bipolar RF technology, positioned in minimal access surgery markets
currently not addressed by Gyrus. It operates a 105 strong US sales force of
independent medical sales professionals from its headquarters in Minneapolis,
Minnesota, a major global centre of medical excellence.
* A combined US and European sales force for Gyrus/Everest branded products
provides a strong base for higher margin growth of direct sales in a global
market for minimal access surgery products estimated to reach $5 billion by
2001. (Source: Biomedical Business International, 1999)
* The affinity of Gyrus' and Everest's products, their value-added
positioning in the market, the underlying technologies, customer base, markets
and geographical distribution are naturally synergistic, with virtually no
overlap.
* Both companies have an expertise in developing new market opportunities for
their technologies. This expertise will be key to the combined business
strategy as these developments are accelerated to enhance the product
portfolio sold through direct sales channels.
* The two companies both have well established and complementary corporate
relationships. These include Ethicon Inc, Guidant Corporation, C.R. Bard Inc.
and Ethicon Endo-Surgery (Ethicon Inc. and Ethicon Endo-Surgery are both
subsidiaries of Johnson & Johnson).
* The experienced and proven management team at Everest will remain in place.
USE OF PROCEEDS
The Directors intend that the net proceeds from the Placing and Open Offer
(amounting to approximately #43 million) will be used as follows:
* approximately #34 million for the completion of the Acquisition and
associated expenses; and
* approximately #9 million to accelerate technology development of the
Enlarged Group and increase expenditure on sales and marketing. The Company
intends to place this sum on deposit until it is required.
Nomura is acting for Gyrus in connection with the Acquisition and Placing and
Open Offer and no-one else, and will not be responsible to anyone other than
Gyrus for providing the protections offered to customers of Nomura nor for
providing advice in relation to the Acquisition and the Placing and Open
Offer.
This announcement does not constitute an offer or an invitation to purchase
any securities.
NOTES:
Gyrus
Gyrus designs, develops, manufactures and markets advanced electrosurgical
systems.
Gyrus' bipolar electrosurgical systems have been developed specifically for
the rapid removal, contouring and cutting of tissues during minimal access
surgical procedures. These systems promote the transition towards outpatient
surgery, which is a more cost-effective management of healthcare resources.
Gyrus was founded in 1989 by Mark Goble, a former surgeon, and his brother
Colin Goble, an expert in the design and development of analogue electronics.
They recognised the opportunity to combine their experience to develop and
commercialise electronic equipment positioned in emerging sectors of the
healthcare market.
The Company's initial focus was the commercialisation of a number of products
under research, development and supply agreements including an agreement with
Valleylab, a subsidiary of Pfizer Hospital Products Group. Following a change
in strategic direction by Valleylab, these agreements were terminated by Gyrus
in 1995 allowing the Company to continue its focus on procedure based minimal
access systems.
This focus has given Gyrus a very clear business development strategy based on
a segmented approach to the minimal access surgery market as a whole. In each
segment, a particular surgical procedure or treatment is identified. In
differentiating its technology to meet the requirements of these "lead"
procedures, the key features are to improve clinical outcomes and reduce
costs.
Gyrus' products are all based on its PlasmaKinetic technologies. The Company
currently sells products in three speciality segments of the minimal access
market and products to address a further five are under development.
PlasmaKinetic techniques have been shown to reduce trauma and recovery times,
in certain markets providing a compelling alternative to other forms of
treatment. With the continued pressure to reduce healthcare costs, minimal
access surgical management of a variety of diseases becomes an attractive
option. The Directors believe that this trend will be accelerated as advances
in surgical techniques enable more and more surgery to be performed in clinics
and day centres.
Gyrus commercialises its products through a combination of licence agreements,
regional distributors and a direct sales force in the UK. The Company's
principal licensee is J&J, which sells the VAPR Arthroscopic system and
VersaPoint Hysteroscopic system. These were launched during the first half of
1997 and are both now sold through worldwide marketing alliances with Ethicon,
a subsidiary of J&J. In May 1998, the Company implemented the second phase of
its business development strategy as the Gyrus Endourology System was launched
through a direct UK sales force and, subsequently, a regional distribution
network has been put in place covering the major European territories.
Following FDA 510(k) approval in July 1999, a number of key centres in the US
have been performing clinical evaluations whilst the Company has been
reviewing strategic options to address the US market.
Gyrus was listed on the Official List of the London Stock Exchange in November
1997 raising #12.2 million net of expenses with a market capitalisation of #45
million. As at the close of business on 13 March 2000 the Company had a
market capitalisation of approximately #118 million and is included as a
company on techMARK, the London Stock Exchange's index for innovative
technology companies.
Gyrus employs 195 people at its headquarters and manufacturing plant near
Cardiff, Wales. The plant includes a 3,000-sq ft. Class 10,000 clean room
where the single use disposables for use with PlasmaKinetic systems are
produced. A second facility is now under construction on an adjacent site
which should double production capacity by the end of 2000. In 1998, the
Company also established a European sales office.
Everest
Everest designs, develops, manufactures and markets advanced electrosurgical
instrumentation.
Everest's bipolar electrosurgical instruments have been developed specifically
to cut, seal and manipulate tissues during minimal access surgical procedures.
Lead products are promoted on the basis of safety and multi-functionality
that reduces costs and operative time by eliminating the need to use multiple
instruments during a procedure.
Everest was incorporated in Minnesota in 1983. Everest was initially involved
in the development of bipolar RF systems technology, including RF generators.
It subsequently recognised that its technological competencies were primary in
the design and development of innovative bipolar instrumentation. Since then,
Everest has developed extensive expertise in the control and containment of
bipolar RF energy to affect both surgical cutting and coagulation of vascular
tissues in a variety of surgical and interventional procedures. These
instruments are now developed to be compatible with a range of RF generators
sold by third parties, thereby leveraging a large installed base.
The benefits of this strategy mean that Everest's instruments can be used in
virtually every surgical site throughout the world. The disadvantages of this
strategy are that performance is not always optimal and that the testing of
Everest's products is necessarily quite extensive. Everest has used its
expertise to design, develop and manufacture proprietary surgical instruments
for use in selected minimal access surgical procedures where the safety and
other features of bipolar electrosurgery have demonstrable advantages. These
advantages have been further enhanced by the inclusion of additional
functionality within a single instrument allowing surgeons to retract, grasp,
dissect, divide and manipulate tissues. Everest currently sells products into
three major speciality segments of the minimal access market: general and
gynaecological laparoscopic surgery, minimal access cardiac surgery and
endoscopic gastroenterology. Other potential market opportunities are under
evaluation as well as expanded procedure applications in the markets currently
addressed by Everest.
Everest commercialises its products through a combination of corporate
marketing alliances, a US network of 105 independent medical sales
professionals, managed through regional sales managers, and select surgical
speciality distributors internationally. Everest's principal corporate
partners are Guidant, Ethicon Endo-Surgery and C.R. Bard. Markets and
customers served by products which broadly comprise the older, single
function, bipolar instruments have been defined by Everest as mature
businesses, including the gastroenterology business with C.R. Bard and the
laparoscopy products sold through Ethicon Endo-Surgery. Those served by the
new multi-functional instrument technologies have been defined as growth
businesses, including Everest's own-brand products sold to the laparoscopic
markets and the minimal access cardiac surgery products sold through Guidant.
Everest commenced sales of laparscopic surgical products in 1991. The first
product sold was the BiLAP Bipolar Cutting/Coagulating Probe. Everest added
the BiCOAG Bipolar Forceps and the EVERSHEARS Straight Bipolar Scissors in
1992 and the EVERSHEARS Curved Bipolar Scissors in 1993. In 1994, Everest
introduced the EVERSHEARS II Bipolar Metal-on-Metal Curved Scissors, the
BiCOAG Bipolar Dissecting Forceps and the BiLAP Bipolar Needle Electrode. In
1995, Everest commenced sales of the BiCOAG Cutting Forceps, and in 1996 added
other versions including a 5mm version of the BiCOAG Cutting Forceps. In
1996, Everest also introduced the BiCOAG Forceps in a 3mm version for female
tubal sterilisation procedures.
In 1996, Everest identified the emerging minimal access cardiac surgery market
as its first major market diversification. In June 1997, Everest announced
its first commercial venture in this market, a licence and supply agreement
with Guidant. Guidant is a leader in minimal access cardiac surgery and sells
a version of the EVERSHEARS II Bipolar Scissors and an innovative version of
the bipolar cutting forceps, the BiSECTOR Bipolar Ligating Forceps in its
minimal access saphenous vein harvesting systems. These products were
introduced to the market in the third quarter of 1997. In 1998, Everest
developed and commenced shipments to Guidant of additional versions of these
devices for exclusive use by Guidant with its VASOVIEW UNIPORT Endoscopic
Vessel Harvesting System. In 1999, Everest introduced and commenced limited
sales of the QUADripolar Cutting Forceps in a 5mm version.
In the financial year ended 31 December 1999, Everest had sales of $12.6
million (1998: $10.7 million), gross profits of $6.4 million (1998: $5.2
million) and net pre-tax income of $1.4 million (1998: $0.67 million). At 31
December 1999, Everest had net assets of $3.9 million excluding the deferred
tax asset of $3.3 million. Everest sales increased by 18 per cent. in 1999
and this growth has continued in the first part of the current year.
Everest's common stock is currently traded on the NASDAQ over-the-counter
market under the symbol EVMD.
Everest employs 106 people at its headquarters and manufacturing plant in
Minneapolis, US. The plant includes a controlled environment assembly room,
where all single use, bipolar instruments are produced, and a clean room where
they are packaged.
Jean Garon PR
Tel: (01628) 483040
Fax: (01628) 486796
END
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