Cordlife to acquire Asian businesses for A$5.5 million

Spans India, Philippines, HK and Indonesia.

In a release, Cordlife Group Limited (Cordlife), a leading cord blood and tissue banking service provider, announced that it has entered into a conditional sale and purchase agreement (S&P Agreement) with Cordlife Limited (CBB), a company listed on the Australian Securities Exchange, to acquire CBB’s cord blood and cord tissue banking businesses and assets in India, the Philippines, Hong Kong and Indonesia for an aggregate consideration of A$5.5 million.

The acquisition will enable Cordlife to enlarge its geographical footprint in Asia, and is in line with the Group’s stated intentions in its 21 March 2012 prospectus to expand its business operations overseas.

Mr Jeremy Yee, Executive Director and Chief Executive Officer of Cordlife said, “With this acquisition, we have achieved yet another milestone in our Group’s expansion plans, and in a shorter span of time than anticipated. The operations in India, the Philippines and Indonesia have developed at astounding speed, which is indicative that these countries are fast-growing markets with their economies driven by a burgeoning middle-class and rising affluence.

According to a 10 April 2013 report by Deloitte & Touche Financial Advisory Services Limited (“the Deloitte report”), the 2007 – 2011 Compound Annual Growth Rate of annual incremental storage units for private cord blood banks in these three countries are at 38% for Indonesia, and 35% for the Philippines and India.

Mr Yee continued: “We are looking to tap into the growth story of these nations and expand our geographical footprint in Asia as part of our horizontal growth plans. In terms of our vertical growth, we recently became the first in Singapore to launch umbilical cord tissue banking services. In just slightly more than a year since our March 2012 listing on SGX, we are already accomplishing many of the plans outlined in our prospectus, thanks in part to good industry momentum in the region, where more people are becoming aware of the benefits of private cord blood and tissue banking for their children.

Under the S&P Agreement, the Group will acquire from CBB’s direct wholly-owned subsidiary, Cordlife Services (S) Pte. Ltd. (Cordlife Services) the following (i) 2,897,540 ordinary shares of CS Cell Technologies Pte. Ltd. (CSCT Singapore); and (ii) 1,000,000 ordinary shares of Cordlife Stem Cell Technology Limited (CSCT Hong Kong), both representing 100% of the respective companies’ issued and paid-up share capital.

CSCT Singapore is an investment holding company which holds 85% of the issued and paid-up ordinary share capital of Cordlife Sciences India Pvt. Ltd. (Cordlife India), a company incorporated in India and whose principal business activity is the provision of cord blood and cord tissue banking services in India. Following a restructuring exercise (Restructuring) involving the transfer of 107,195 common shares in the capital of Cordlife Medical Phils., Inc. (Cordlife Philippines”) by Cordlife Services to CSCT Singapore, CSCT Singapore shall also hold approximately 99.99% of the issued share capital of Cordlife Philippines.

The Group will also acquire the following assets from CBB’s indirect wholly-owned subsidiary, P.T. Cordlife Indonesia (Cordlife Indonesia): (i) certain customer contracts; (ii) the cord blood storage tanks; and (iii) certain equipment, in connection with Cordlife Indonesia's cord blood banking business.

Conditions for the completion of the acquisition include: CBB obtaining their shareholders’ approval for the acquisition, the completion of the Restructuring and the redemption by CSCT Singapore of the outstanding unsecured convertible bonds due 2014 of an aggregate principal amount of S$1.5 million held by Cordlife.

The aggregate consideration of A$5.5 million for the acquisition was arrived at on a willing-buyer willing-seller basis, taking into account amongst other factors, aggregate net tangible asset value of the assets to be acquired of approximately A$3.7 million as at 31 December 2012.

The consideration will be fully satisfied in cash (50% on completion of the acquisition and the remaining 50% three months thereafter) and funded by the net proceeds raised from the Group’s initial public offering (IPO). This is in line with Cordlife's intentions, as disclosed in its prospectus, to use S$16.6 million, or about 55.9% of its net IPO proceeds to develop and expand the Group’s business and operations in Singapore and overseas.

The acquisition is not expected to have any material effect on the consolidated net tangible assets and earnings per share of the Group for the financial year ending 30 June 2013.