LONDON (ShareCast) - (Sharecast News) - Biostable polymer and medical devices company AorTech International has entered into a conditional agreement with non-executive director David Richmond to acquire RUA Medical Devices, an Ayrshire-based innovative and experienced implantable fabric specialist and full service contract medical device developer and manufacturer, ti announced on Wednesday.
The AIM-traded firm said consideration for the purchase would be ?2.45m, which would be satisfied by ?0.95m in cash and the allotment and issue of 1,500,000 new ordinary shares at ?1 each, subject to shareholder approval.

It described the acquisition as a "profitable, cash generative, full-service" medical device developer and manufacturer that provided sub-contract manufacturing, assembly, packing and services to the medical device sector from its Class 7 and 8 cleanroom suites.

The cash element of the consideration would be satisfied from the company's existing resources, the board said, while the consideration shares were being issued at a price of ?1 per share, which would be a premium of 34.2% to the closing price on 10 March.

AorTech International said it was seeking to vertically integrate the business by providing "the people, premises and processes" necessary to convert its 'Elast-Eon' polymer into Elast-Eon products.

The acquisition would effectively internalise AorTech's manufacturing process, obtaining a large amount of manufacturing know-how, and would enable it to increase the gross margin potential of its patches and graft products.

At the same time, AorTech said it was proposing to change its name to RUA Life Sciences, adding that immediately following completion, it planned for David Richmond, who is the sole shareholder of RUA, to become group chief executive officer.

"This deal is a perfect strategic fit for the company providing the people, processes and premises to allow our world class polymers to be converted into medical device products," said chairman Bill Brown.

"We look forward to a closer working relationship with David Richmond and his talented team at RUA and are delighted that David has demonstrated his belief and confidence in the prospects for all of our Elast-Eon enabled devices by taking a substantial interest in the company."

At 1424 GMT, shares in AorTech International were up 6.04% at 79p.

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