Optos to Acquire Opto Global Holdings Pty Ltd for up to US$14.75million

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November 12, 2010 – Optos plc (LSE: OPTS) (“Optos”), a leading medical retinal imaging company, is pleased to announce the proposed acquisition of the entire issued share capital of Opto Global Holdings Pty Ltd (“Opto Global”) for up to US$14.75 million. The transaction brings Optos a revenue generating business with a strong range of products and a global distribution network.  In particular, Optos will be able to expand the market for Opto Global’s products in the US and EU markets and will also promote its own products in Opto Global’s international markets in the Far and Middle East, Australasia, Africa and Latin America.

Optos has today made a conditional cash and share offer to the shareholders of Opto Global to acquire the entire issued share capital of the Company (the “Offer”). In the event that the shareholders of Opto Global do not accept the Offer, Optos has agreed with Opto Global to acquire the business and substantially all of the assets of Opto Global including the shares of its subsidiary undertakings.  The total consideration payable to shareholders of Opto Global under the Offer is up to US$14.75 million (c£9.2 million at today’s US$:UK£:exchange rate), comprising initial consideration payable on completion of the Offer of US$10.75 million in cash and US$1 million to be satisfied by the issue of new ordinary shares of Optos plc and contingent cash consideration of up to US$3 million based on the achievement of certain revenue-related milestones over the twelve month period commencing in the third month after completion of the Offer.

Roy Davis, CEO of Optos commented “This acquisition brings a number of complementary products which we can market through our sales channel in our core US and EU markets. In addition, through this deal we expand our geographic reach into new markets, particularly the Far East and gain access to a strong distributor network and pipeline of new product opportunities. We expect the impact of this transaction to be earnings enhancing in the current financial year. This represents an important step in our journey to becoming a leading provider of diagnostic and treatment solutions to the ophthalmic community.”

Opto Global

Opto Global is an ophthalmic device company based in Adelaide, South Australia. The company sells a range of over 20 optometry and ophthalmology products through a network of international distributors and through its own salesforce in Australia.

The Company designs, develops, sources and sells precision optometric and ophthalmic equipment that covers the diagnosis and treatment in the four main areas of ophthalmology; glaucoma, cataract, refractive and retina.  The products meet the needs of ophthalmologists, optometrists, hospitals and associated health care professionals and includes a range of perimeters and visual acuity products used by optometrists in standard eye examinations, XLink, used in conjunction with Riboflavin by ophthalmologists in the treatment of keratoconus or in the repair of the cornea following laser sight correction surgery and photo-disruptor and photo-coagulator laser products used by ophthalmologists in the treatment of eye diseases and disorders.

Opto Global sources its products from a range of device manufacturers. The principal suppliers are Frey, Lightmed and Opto Eletrônica SA. Opto Eletrônica, based in Brazil, is closely linked with Opto Global as a shareholder, supplier, contract manufacturer and distributor for the Central and South American markets. The company has a number of new product development initiatives underway, particularly in developing new laser products. It has licensed the final development and manufacturing of a yellow wavelength laser (that offers potential safety benefits over other wavelengths) to Opto Eletrônica and the companies plan to launch this product in the near term.

Opto Global’s revenues for the year to 30 June 2010 were AU$4.5 million (£2.8 million) with the majority of sales arising from customers in the Middle East and Africa and, through Opto Eletrônica, in South and Central America. The Opto Global group made losses of AU$0.5 million in the year to 30 June 2010 and its net assets at that date were AU$2.7million.

The Chairman of Opto Global, Fiona Pak-Poy, and General Partner with Innovation Capital, commented “The Opto Global board believes this acquisition presents an excellent opportunity for the company.  Optos’s strong sales channel allows us to distribute our growing product range into major markets and to deliver important revenue synergies”.

Transaction rationale

Optos has been seeking additional products to sell through its existing sales channel of over 65 representatives (primarily US and Europe) and to build additional channels in the rest of the world through which to sell its own products.

Opto Global currently has minimal sales in the US and EU, but does have rights to sell most of its products in these markets. As a consequence, this transaction presents an opportunity for Optos to gain significant revenue synergies through the sale of the Opto Global’s products in its core current markets. Within optometry, products such as Opto Global’s automated perimeter and visual acuity devices will be promoted by Optos to its current and new customers. Within ophthalmology, the addition of Opto Global’s laser treatment products will add further depth to the offering of the Optos Ophthalmology division.

Sales of Optos’ products outside its core North American and European markets are currently minimal. Having a network of distributors, in particular in the Far and Middle East, Africa and in South and Central America, offers Optos the opportunity to sell its own devices to these important markets. Whilst the sale of Optos products through distributors has previously been a low priority, with P200 devices now carried at low net book values, and with the forthcoming launch of the desktop device in the next two years, Optos plans to build a strong business through a distributor network on a more international basis, and directly through Opto Global in the Australian market.

In addition to the clear revenue synergies, further potential cost synergies arise with the elimination of duplicated costs and the possibility of lower cost manufacture. Finally, Opto Global’s research and development programmes and supply arrangements provide us with the potential to access a range of new products.

The CEO of Opto Global, Jairo Kerr Azevedo is to remain with the business after the acquisition completes and will join the Optos Operating Board upon completion.

Transaction Details

Optos has today entered into an implementation agreement with Opto Global and Innovation Capital Fund II LP, a principal shareholder of Opto Global, pursuant to which Optos has agreed to make the Offer and, in the event that the Offer does not become unconditional, the parties have agreed to implement the asset transaction. The initial closing date of the Offer is 13 December 2010.

Subject to the Offer becoming unconditional in accordance with its terms, the aggregate initial consideration payable by Optos to the shareholders of Opto Global on completion of the Offer will be US$11.75 million, comprising the payment of US$10.75 million in cash and US$1 million to be satisfied by the issue of new shares in Optos plc, the number of such shares to be determined by reference to the closing price of an Optos share for the five trading days preceding completion of the Offer and using an average closing UK£:US$ exchange rate (which would amount to approximately 600,000 Optos shares at today’s share price and exchange rate). The new Optos shares, which are to be issued to four Opto Global shareholders, will be subject to lock-in and orderly market arrangements for a period of 18 months from the date of completion of the Offer.

Additional contingent cash consideration of up to a total of US$3 million may be paid to the shareholders of Opto Global based on the achievement of certain revenue and gross margin targets for the twelve month period commencing in the third month following completion of the Offer. The contingent consideration will be payable (if any) on the first business day falling one month after the earn-out period or, in the event of any dispute over the calculation of the contingent consideration, within ten business day of determination by the parties or an independent chartered accountant. The contingent consideration will be reduced to the extent that any warranty claims that may be brought by Optos under the terms of the Offer are agreed or finally determined in favour of Optos.

The Offer is conditional upon, among other things, Optos acquiring 100 per cent of the shares in Opto Global. In addition, the Offer is also subject to other conditions, including the absence of any material adverse change in the business, assets or condition of the Opto Global group, all outstanding convertible instruments being converted into shares of Opto Global prior to completion of the Offer and the board of Opto Global not withdrawing their recommendation of the Offer.

Under the terms of the Offer, certain shareholders of Opto Global have agreed to provide warranties to Optos (subject to agreed limitations on the amounts which may be claimed under those warranties and the time period in which claims may be brought) which are customary for a transaction of this nature. The formal terms and conditions of the Offer are set out in an offer document which has been sent by Optos to shareholders of Opto Global today.

In the event that 100 per cent of the Opto Global shareholders do not accept the Offer, Optos has agreed with the board of Opto Global to acquire the business and substantially all of the assets of Opto Global for the same aggregate consideration which would have been payable by Optos under the terms of the Offer, subject to certain reductions in respect of taxation and other liabilities arising as a result of the asset sale compared with the Offer. The asset transaction will be subject to similar conditions to those attaching to the Offer including the requirement for all material contracts of Opto Global to be novated or assigned to Optos.

The value of the gross assets being acquired, excluding intangible assets, was AU$4.1million as at 30 June 2010 and the trading losses for the year then ended amounted to AU$0.5million.

In the event that the Offer does not become unconditional in accordance with its terms, it is anticipated that the asset transaction will close by the end of February 2011.

Optos’ preliminary results for the year ended 30 September 2010 will be announced on 24 November 2010.

Enquiries 

Note to Editors: Images available upon request

About Optos Plc

Optos plc is a leading retinal imaging company. Our vision is to be recognised as the leading provider of retinal diagnostics through leveraging our unique wide-field imaging technology. Both eye and non-eye diseases often first exhibit in the periphery of the retina. These are very difficult to detect clinically with conventional examination equipment and techniques. Optos' devices produce ultra wide-field, high resolution images of approximately 82% of the retina, something no other device is capable of doing in any one image. The images provide optometrists and ophthalmologists with enhanced clinical information which facilitates the early detection, management and treatment of disorders and diseases evidenced in the retina such as retinal detachments and tears, glaucoma, diabetic retinopathy and age-related macular degeneration. Retinal imaging can also indicate evidence of non-eye or systemic diseases such as hypertension and certain cancers. Optos has a range of medical devices that support different customer segments and patient levels: the P200 device is concentrated on wellness screening carried out by optometrists and ophthalmologists in primary care; the P200C device is designed to meet the need for more exacting clinical imaging capabilities and standards in secondary care within the ophthalmology market and at optometric practices that are clinically managing a patient base with advanced ocular disease; and the P200MA device supports retinal specialists, working primarily with a diabetic patient base, in the medical care market through an advanced medical angiography procedure. Optos' technology provides an unequalled combination of wide-field retinal imaging, speed and convenience for the practitioner and patient resulting in more targeted treatment regimes and improved patient outcomes. 75% of all blindness can be treated or prevented if diagnosed early enough and our Optos technology supports this objective.

For more information please visit our website www.optos.com.

Forward-Looking Statements

Certain statements made in this announcement are forward-looking statements. These forward-looking statements are not historical facts but rather are based on the Company's current expectations, estimates and projections about its industry, its beliefs and assumptions. Words such as 'anticipates,' 'expects,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and other factors, some of which are beyond the Company's control, are difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements. The Company cautions shareholders and prospective shareholders not to place undue reliance on these forward-looking statements, which reflect the view of the Company only as of the date of this announcement. The forward-looking statements made in this announcement relate only to events as of the date on which the statements are made. The Company will not undertake any obligation to release publicly any revisions or updates to these forward-looking statements to reflect events, circumstances or unanticipated events occurring after the date of this announcement except as required by law or by any appropriate regulatory authority.