Attached files
file | filename |
---|---|
8-K - LANDEC CORP \CA\ | v183185_8k.htm |
EX-10.1 - LANDEC CORP \CA\ | v183185_ex10-1.htm |
EX-10.3 - LANDEC CORP \CA\ | v183185_ex10-3.htm |
EX-10.2 - LANDEC CORP \CA\ | v183185_ex10-2.htm |
FOR IMMEDIATE
RELEASE
|
|
Contact
Information:
|
|
At
the Company:
|
EAS
& Associates:
|
Gregory
S. Skinner
|
Liz
Saghi
|
Vice
President Finance and CFO
|
(415)
816-8868
|
(650)
261-3677
|
LANDEC
CORPORATION ACQUIRES LIFECORE BIOMEDICAL
MENLO
PARK, CA – May 3, 2010 – Landec Corporation (Nasdaq: LNDC), a materials science
company that develops and markets patented polymer products for food,
agriculture, personal care and drug delivery applications, today announced that
it has acquired Lifecore Biomedical, Inc. from Warburg Pincus Private Equity IX,
LP (“Warburg Pincus”). When acquired by Warburg Pincus in March 2008,
Lifecore was comprised of two divisions, the Dental Division and the Hyaluronan
Division. The Dental Division was merged into a Warburg Pincus
portfolio company. The Hyaluronan Division, now Lifecore, based in
Chaska, MN, is a leading supplier of premium hyaluronan-based biomaterials for
the medical and veterinary markets. Lifecore hyaluronan biopolymers
are used in a wide and ever-growing range of therapeutic treatments, including
cataract surgery, degenerative joint disease, spinal defect filling, medical
device coatings, cosmetic soft tissue enhancement and equine osteoarthritis, as
well as in numerous research initiatives.
“The
acquisition of Lifecore significantly advances our stated strategy to acquire a
company that expands our capabilities in materials science, specifically in the
area of biomaterials,” said Gary Steele, Chairman and CEO of Landec. “Hyaluronic
acid (HA) is naturally present in the skin, cartilage and fluid of humans and
provides lubricating, connective and shock absorbing functions in both joints
and soft tissue. Demand for premium, fermented hyaluronan in
biomaterial applications is growing. We view Lifecore’s hyaluronan
biopolymers as a technology platform that can provide unique HA product
innovations, as well as new products from potential synergies with Landec’s
existing Intelimer®
polymers.”
Lifecore’s
President and CEO, Dennis J. Allingham, added, “We welcome the strategic
acquisition of Lifecore by Landec, which strengthens our commitment to the
development of technically advanced hyaluronan-based specialty medical products
that can offer treatment advantages and compatibility within the human
body. We are excited about the potential opportunities to apply
Landec’s knowledge of polymer technology to our new product concepts as a means
to expand our product offerings, bring greater value to our customers and
attract market-leading partners.”
Under the
agreement, Landec acquired the stock of Lifecore for $40.0 million in cash and
assumed debt of approximately $4.0 million. In addition, the
agreement includes a future cash earn-out potential for Warburg Pincus of up to
$10.0 million based on Lifecore achieving certain financial targets during
calendar years 2011 and 2012. In conjunction with the acquisition,
Landec secured bank financing of $20.0 million. The financing has a
five year term with a fixed interest rate of approximately
4.2%. After the acquisition, Landec’s cash and marketable securities
balance will be approximately $50.0 million. As a result of this
transaction, Landec will record approximately $2.9 million of acquisition
related expenses during the fourth quarter of fiscal year 2010.
For
Landec’s fiscal year 2011, which begins May 31, 2010, Lifecore’s revenues are
projected to be in the range of $26 million to $28 million. Before
the impact on cost of sales from having to step-up inventory to fair market
value and from any incentive stock compensation, Lifecore is expected to realize
an average gross margin of approximately 50% and an EBITDA margin of
approximately 27%, generating EBITDA in the range of $7.0 million to $8.0
million. Under accounting guidance for business combinations,
inventory must be recorded at its fair market value and thus the value of
finished goods inventory, and in some instances work in process inventory, is
stepped-up to fair market value. The increase in the recorded value
of the inventory results in lower margins upon the sale of the specific
stepped-up inventory until that inventory is completely sold. Landec
is currently in the process of valuing the finished goods inventory and will
know the amount of the step-up within the next 30 days.
“The
acquisition of Lifecore is consistent with our stated strategy to acquire a
company that expands our capabilities in materials science, and advances three
additional stated objectives, which are (1) to invest in areas of growth outside
of our food technology business, (2) to invest in areas of biomaterials that
have potential synergies with Landec’s Intelimer polymers and (3) to make an
acquisition that is accretive now and going forward. Lifecore
represents an important investment for Landec’s future innovation in the area of
biomaterials. Landec’s focus on profitable growth and positive cash
generation allows us to selectively pursue and take advantage of growth
opportunities that meet or exceed our criteria for achieving attractive returns
on our investment,” stated Steele.
About
Lifecore Biomedical
Lifecore
Biomedical, based in Chaska, MN, develops, manufactures, and markets
hyaluronan-based biomaterials in the form of compounds and several finished
products for biomedical applications targeting both joints and soft tissue in
ophthalmic, orthopedic and veterinary markets. The compounds, used as
components in medical devices, veterinary products and drugs, are available as
sodium salts and as a viscous solution available in syringes, vials or bulk
sterile containers. The finished products include: (1) Lurocoat®
Ophthalmic Viscoelastic for use in ophthalmic surgical procedures including
cataract extraction and intraocular lens implantation, (2) Ortholure™ Orthopedic
Viscosupplement for use in pain and restricted mobility indications due to
degenerative and traumatic changes in synovial joints such as the knee, and (3)
Corgel™ BioHydrogel research kits, a hyaluronan-based biocompatible hydrogel,
initially developed at the Cleveland Clinic and now under an exclusive license
agreement for numerous biomedical applications. Lifecore primarily
conducts its business through partnerships with strategic market leaders in
various medical fields and through contract manufacturing
alliances. For more information visit Lifecore’s website at www.lifecore.com.
About
Landec Corporation
Landec is
a materials science company, leveraging its capability in polymer science and
bio-application development in order to commercialize new products within a
variety of life science fields, including food, agricultural, personal care and
drug delivery applications. With its Intelimer®
polymers, Landec is able to customize its proprietary polymer materials for each
application through the manipulation of their unique controlled release,
temperature activation and/or biocompatibility properties. Landec’s
subsidiary, Apio Inc.,
has leveraged Landec’s BreatheWay® membrane
to become the leader in US fresh-cut specialty vegetables. Landec Ag offers a full
solution of seed coatings and enhancements that work with the latest genetic
technologies to drive continuous improvements in crop yield. Through
long-standing partnerships, Landec has commercialized dozens of personal care
and adhesive products. For more information about the Company visit
Landec’s website at www.landec.com.
Except
for the historical information contained herein, the matters discussed in this
news release are forward-looking statements that involve certain risks and
uncertainties that could cause actual results to differ materially, including
such factors among others, as the timing and expenses associated with expanding
operations, the ability to achieve acceptance of the Company's new products in
the market place, the severity of the current economic slowdown, weather
conditions that can affect the supply and price of produce, the amount and
timing of research and development funding and license fees from the Company's
collaborative partners, the timing of regulatory approvals, new product
introductions, the mix between domestic and international sales, and the risk
factors listed in the Company’s Form 10-K for the fiscal year ended May 31, 2009
(See item 1A: Risk Factors). As a result of these and other factors,
the Company expects to continue to experience significant fluctuations in
quarterly operating results and there can be no assurance that the Company will
remain consistently profitable. The Company undertakes no obligation
to update or revise any forward-looking statements whether as a result of new
developments or otherwise.
Grace
Matthews, Inc. of Milwaukee, Wisconsin assisted Landec Corporation in completing
this transaction. Grace Matthews provides merger, acquisition, and corporate
finance advisory services to corporate and entrepreneurial clients. Grace
Matthews' principals have successfully completed transactions on behalf of
clients ranging from private, middle market companies to large foreign and
U.S.-based multi-nationals. For more
detailed information on Grace Matthews, Inc., visit www.gracematthews.com.