Tristel is buying the rights to infection control products produced by Medichem International.
The infection and contamination control products supplier is paying a minimum of £2.15m for the Medichem products. The maximum payable is £2.4m. This deal should be earnings enhancing in Tristelís next financial year.
Tristel raised £1m from an oversubscribed share placing at 41p a share in order to make the initial payment. The rest is payable over five years depending on the sales of the product portfolio.
The products include surface disinfectant TriGene Advance, which is aimed at the animal healthcare market. This is a new market for Tristel. The products use antimicrobial chemistries. The portfolio of products generated revenues of £2.06m in 2008.
Tristel will manufacture the products and Medichem will still distribute them. The manufacturing will be transferred to the Newmarket factory over the second half of 2009.
At 44p a share, Tristel is valued at £11.8m.
A higher utilisation of the Newmarket factory will help to improve the return from the facility. House broker Daniel Stewart upgraded its profit forecast for the year to June 2010 from £1.6m to £1.8m. That puts the shares on 10 times prospective 2009-10 earnings.
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