ImmunoPrecise to Acquire ModiQuest Research BV

On December 11, 2017 IMMUNOPRECISE ANTIBODIES LTD. (the "Company") (TSX VENTURE: IPA)(OTC PINK: IPATF) reported that it has signed a binding letter of intent with ModiQuest Research BV ("ModiQuest") whereby the Company has agreed to acquire all of the issued and outstanding shares of ModiQuest (the "Transaction") (Press release, ModiQuest Therapeutics, DEC 11, 2017, View Source [SID1234522558]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

The Transaction continues to realize on the Board’s commitment to grow globally through strategic acquisitions. It allows IPA to become a single source provider of services across the full antibody discovery value chain (antigen design, hit generation, lead selection, lead optimization and lead characterization) and to offer the full spectrum of antibody production methodologies (library based technologies, hybridoma methods, transgenic animal based platforms and single B cell based technology). Furthermore, the acquisition enhances the Company’s capacity for generating human antibodies.

"In acquiring ModiQuest Research B.V., IPA becomes a leading integrated antibody solutions company with global reach," said Dr. James Kuo, Chairman, Interim President of the Company.

ModiQuest

ModiQuest is a privately held company based in Oss, The Netherlands that specializes in the generation of monoclonal antibodies against difficult target antigens. ModiQuest applies proprietary technologies to all aspects of the antibody discovery process in research and development, diagnostic and therapeutic applications. Using its proprietary ModiFuse (hybridoma electrofusion), ModiSelect (B-cell selection) and ModiPhage (phage display) technologies, ModiQuest can generate very large panels of monoclonal antibodies from various backgrounds including mouse, rat, rabbit, chicken, llama and human, as well as transgenic animals harboring the human antibody gene repertoire. ModiQuest serves clients in Europe, the US, Asia and Russia. During its year-ended 2016, ModiQuest had revenues of €2,009,374 (CAD $3,037,249) and earnings of €671,799 (CAD $1,015,451).

The Transaction is accretive in both revenue and earnings and brings additional scientific and management capacity.

Terms of Transaction with ModiQuest

Under the binding letter of intent, the Company and ModiQuest have agreed to negotiate a definitive agreement (the "Definitive Agreement") whereby the Company will acquire all of the issued and outstanding shares of ModiQuest for €7,000,000 (CAD$10,570,000) (the "Purchase Price"), of which (A) €2,500,000 (CAD$3,775,000) will be paid in cash on closing, (B) €2,500,000 (CAD$3,775,000) will be satisfied by the issuance of approximately 6,622,807 common shares of the Company on closing, and (C) €2,000,000 (CAD$3,020,000) in deferred payments over a three year period (the "Deferred Payments"). The Deferred Payments will be made in three equal installments of cash and equity totaling €666,666 (CAD$1,006,665) on each anniversary date following closing of the transaction. The Deferred Payments will be prorated if the EBITDA of ModiQuest fails to equal the average EBITDA from the previous two years. ImmunoPrecise expects to finance the cash portion of the purchase price using a convertible debt instrument.

The letter of intent also requires that Jos Raats, a principal of ModiQuest, to enter into a three year management contract, which will include non-solicitation and non-competition clauses, and Mr. Raats will provide a minimum of 60% of full time employment to ModiQuest under the management contract. The Company has also agreed to appoint one of the principal shareholders of ModiQuest to its board of directors.

The parties will be entitled to carry out due diligence of each other until February 15, 2018. Upon the parties completing due diligence to their reasonable satisfaction, the parties will enter into the Definitive Agreement setting forth the terms and conditions of the Transaction by February 28, 2018. Completion of any transaction with ModiQuest is subject to a number of conditions, including but not limited to, completion of due diligence, negotiation of definitive agreements in respect of such a transaction, the availability of financing on terms acceptable to the Company, and receipt of any required regulatory and shareholder approvals. A transaction cannot be completed until these conditions are satisfied, and there can be no assurance that a transaction will be completed at all.