Swedish Private Equity Firm Ratos To Buy Biolin Scientific


Swedish private equity firm Ratos has offered 11.50 kronor ($1.64) per share to buy Biolin Scientific. The offer represents a 32.2% premium over the average closing price for Biolin during the past 30 days. Sweden’s Biolin Scientific develops analytical instruments for research, development, quality control and clinical diagnostics.

PRESS RELEASE
Ratos AB (publ) (“Ratos”) announces a recommended cash offer to the shareholders and convertible debenture holders of Biolin Scientific AB (publ) (“Biolin Scientific” or the “Company”) to tender all their outstanding shares and convertible debentures to Ratos for SEK 11.50 per share and per convertible debenture (the “Offer”). Biolin Scientific’s shares are listed on the NASDAQ OMX Stockholm exchange (“NASDAQ OMX”), Small Cap.

The Offer in brief

* Ratos offers SEK 11.50[1] in cash for each share and for each convertible debenture in Biolin Scientific

* The Offer represents a premium of:

– 32.2% compared to the volume-weighted average price of SEK 8.70 for the Biolin Scientific shares traded on NASDAQ OMX during the last 30 trading days prior to announcement of the Offer.

* Biolin Scientific’s Board of Directors has unanimously decided to recommend the shareholders and convertible debenture holders in the Company to accept the Offer

* Shareholders and convertible debenture holders with holdings equivalent to 35.9% of the capital and votes, after full dilution, have committed, on certain conditions, to sell their shares in Biolin Scientific to Ratos as well as to accept the Offer in respect of their convertible debentures

* The Offer is, inter alia, conditional upon the Offer being accepted to such an extent that Ratos becomes the owner of more than 90% of the total shares in Biolin Scientific, on a fully-diluted basis

* The acceptance period for the Offer is expected to commence on 1 December 2010 and end on 21 December 2010. Settlement is expected to take place on 28 December 2010.

[1] If Biolin Scientific pays dividends or makes any other distributions to shareholders, for which the record date occurs prior to the settlement of the Offer, the consideration paid in the Offer as described above will decrease accordingly.

Background and rationale for the Offer

Biolin Scientific develops, manufactures and markets analytical instruments for research, development, quality control and clinical diagnostics. The Company’s largest market niche is nanotechnology, primarily materials science and biophysics. Biolin Scientific’s products are mainly used for the analysis of interfaces, molecular interactions and measurement of material properties. In addition, the Company manufactures and sells diagnostic instruments. The product portfolio includes instruments based on a number of measurement techniques, including several unique methods in which the Company owns the patents. The core strategy is to build expertise in the nanotechnology field, which is deemed to have significant commercial potential, and apply the Company’s technology in that field. Customers mainly comprise researchers in academia, research institutes and the industrial sector. The Company, based in Västra Frölunda, has 89 employees, of which one third are postdoctoral researchers in relevant scientific areas. Biolin Scientific was founded in 1984, was listed in 1997 and is today listed on the NASDAQ OMX, Small Cap, in the Health Care sector.

Biolin Scientific has through organic growth, acquisitions and spinning off of non-core businesses developed from a Swedish research-focused company to an international growth company. The third quarter of 2010 was the twentieth consecutive quarter that Biolin Scientific increased its net sales (on a year- over-year basis), mainly driven by strong underlying market growth, introduction of new products, continuous investments in its sales organisation and product acquisitions as well as M&A activities. Ratos believes that Biolin Scientific’s business niche and market position offer continued strong growth potential.

Biolin Scientific’s goal is to offer high-tech products and engage in cutting edge R&D areas where the commercial potential is expected to be greatest. The Company’s strategy is to grow through complementary acquisitions. There are a large number of small businesses in Biolin Scientific’s market which have solid products, but lack the sales and distribution organisation required to achieve international success. Biolin Scientific has identified attractive opportunities to consolidate a number of small companies, improve distribution and increase sales of their products, combined with lower costs due to more rational production and improved focus in development.

Ratos believes that Biolin Scientific is well positioned to continue its successful development with the existing strategy. Ratos, as owner, intends support the Company’s management team and to assist with capital and expertise in order to support investments in organic and acquisition-driven growth and to further develop the Company’s technology portfolio as well as its distribution network.

Ratos greatly appreciates both Biolin Scientific’s management team and the Company’s other employees and Ratos expects that the Offer in the long term will create growth and have a positive impact on the Company’s employees, customers and other stakeholders. Ratos does not anticipate any material effects of the Offer for the Company’s employees, including employment conditions and employment levels at locations where the Company currently conducts business.

There are no plans to significantly alter Biolin Scientific’s existing strategy.

The Offer

Ratos offers SEK 11.50[1] in cash for each share and each convertible debenture issued by Biolin Scientific. Commission will not be charged in connection with the Offer.

The Offer represents a premium of:

* 32.2% compared to the volume-weighted average price of SEK 8.70 for the Biolin Scientific share traded on NASDAQ OMX during the last 30 trading days prior to announcement of the Offer,

* 25.7% compared to the closing price of SEK 9.15 for the Biolin Scientific shares traded on NASDAQ OMX on 25 November 2010, and

* 17.9% compared to the closing price of SEK 9.75 for the Biolin Scientific shares traded on NASDAQ OMX on 26 November 2010, i.e. the last trading day prior to the announcement of the Offer.

The Offer values the remaining shares in Biolin Scientific at about SEK 277 million based on a total of 24,096,801 Biolin Scientific shares currently outstanding. Including the issued convertible debentures[2], the total value offered amounts to approximately SEK 306 million. The acceptance period runs from the 1 December 2010 until and including 21 December 2010. Settlement is expected to take place on 28 December 2010.

The Offer is not conditional on financing. The Offer will be financed by available cash in Ratos.

The Offer is not conditional upon Ratos’s receipt of any permission or approval from any competition authority.

[1] If Biolin Scientific pays dividends or makes any other distributions to shareholders, for which the record date occurs prior to the settlement of the Offer, the consideration paid in the Offer as described above will decrease accordingly.

[2] The Company has issued convertible debentures equivalent to a nominal amount of in total SEK 25,306,506.80. Full conversion amounts to 2,483,949 shares, equivalent to a dilution of in approximately 9%. After full conversion, the Company’s total number of outstanding shares would be 26,580,750 and the total share capital would be SEK 26,580,750.

Convertible 1: In May 2009, convertible debentures corresponding to SEK 12,500,000 at a conversion price of SEK 10 was issued, eligible for conversion into 1,250,000 shares in Biolin Scientific. After recalculation, in accordance with the terms and conditions of the convertible debentures following the rights issue that the Company completed in the autumn of 2009, the conversion price has changed to SEK 9.51 eligible for conversion into 1,314,405 shares. The debenture carries 3% interest rate from 31 March 2009 and matures on 30 June 2011. The Company reserves the right to repay the loan at any time. Both convertible debenture holders and the Company are entitled to request conversion in the event of an offer for all shares of the Company.

Convertible 2: In April 2010, convertible debentures corresponding to SEK 11,173,631.85 at a conversion price of SEK 10.95 was issued, eligible for conversion into 1,020,423 shares of Biolin Scientific. The debenture carries no interest and matures on 31 March 2011. The Company reserves the right to repay the loan at any time. Both convertible debenture holders and the Company are entitled to request conversion in the event of an offer for all shares of the Company.

Convertible 3: In April 2010, convertible debentures corresponding to SEK 1,632,874.95 at a conversion price of SEK 10.95 was issued, eligible for conversion into 149,121 shares in Biolin Scientific. The debenture carried no interest and matured on 30 September 2010. The Company reserved the right to repay the loan at any time. Both convertible debenture holders and the Company were entitled to request conversion in the event of an offer for all shares of the Company. Information from the Company states that the Company has called for conversion of all debentures regarding Convertible 3 during September 2010. The resulting shares have not yet been registered at the Companies Registration Office and have therefore not been issued to the convertible debenture holders.

Terms and conditions for the Offer

Completion of the Offer is conditional upon:

i) that Biolin Scientific’s shareholders accept the Offer to such an extent that Ratos becomes the owner of shares in the Company representing more than 90% of the total number of shares of the Company on a fully diluted basis;

ii) that any third party does not publish an offer to acquire shares in Biolin Scientific on terms more favourable to shareholders of the Company than the Offer;

iii) that no event or circumstance occurs which would affect or could reasonably be expected to materially adversely affect Biolin Scientific’s result, liquidity, profit or overall financial position (Material Adverse Change);

iv) that the Offer is not, before publication of the completion of the Offer, wholly or partly prevented or materially adversely affected or otherwise materially affected adversely by legislation, court decision, public authority decision or other circumstances beyond Ratos’s control in Sweden or in any another country;

v) that Biolin Scientific’s Board of Directors does not take any action that is likely to impair the prerequisites for the completion of the Offer; and

vi) that Ratos does not, prior to announcement of the completion of the Offer, becomes aware that information published by Biolin Scientific in any material respect is incorrect or misleading, or that any material information that Biolin Scientific has been required to disclose has not been published by the Company.

Ratos reserves the right to withdraw the Offer in the event it becomes clear that the above conditions are not fulfilled or cannot be fulfilled. With regard to conditions ii)-vi), however, such withdrawal will only be made if the non- fulfilment is of material importance to Ratos’s acquisition of shares and convertible debentures in Biolin Scientific.

Ratos reserves the right to waive, in whole or in part, one or more of the conditions above, including with respect to condition i) above, to complete the Offer at a lower level of acceptance.

Recommendation from the Board of Directors in Biolin Scientific

Biolin Scientific’s Board of Directors has unanimously decided to recommend the shareholders and convertible debenture holders to accept the Offer. The recommendation is supported by a fairness opinion from Nordea.

Agreements with shareholders, and commitments from convertible debenture holders of Biolin Scientific

Farstorp Invest AB, owner of 26.1[1] % of the capital and votes in Biolin Scientific and Bo Håkansson, owner of 2.5[1] % of capital and votes of the Company, have entered into agreements with Ratos whereby they have agreed with Ratos to sell their shares in Biolin Scientific to Ratos for SEK 11.50[2] in cash per share.

The share transfers under these agreements are conditional upon the Offer being completed no later than 31 January 2011.

Under the agreement, Farstorp Invest AB and Bo Håkansson have the right to sell their shares in Biolin Scientific to a third party, provided that the third party prior to such sale has agreed to sell the shares to Ratos on the same terms and conditions as Farstorp Invest AB and Bo Håkansson’s agreement with Ratos.

Convertible debenture holders, who in total own convertible debentures which are convertible into shares representing 7.3% of the capital and votes in the Company, have irrevocably undertaken to accept the Offer with respect to these convertible debentures. The convertible debenture holders’ undertakings as set out above are conditional upon the Offer being completed no later than 31 January 2011.