LONDON, UK: Leading molecular diagnostic group Yourgene (AIM: YGEN) has announced the conditional divestment of its Taiwanese subsidiary, Yourgene Health Taiwan Co Ltd, to Singapore-based molecular diagnostics company INEX Innovate Pte Ltd.
The divestment, valued at up to $4 million USD (approximately £3.2 million), will enable Yourgene to streamline its operations and concentrate on expanding its core product-based activities in the Asia-Pacific region.
After conducting an operational and strategic review, Yourgene’s board decided to seek an acquirer for its Taiwan-based business activities while retaining ownership of its proprietary NIPT software, SageTM Prenatal Screening. The divestment is subject to approval from the Taiwanese government for non-Taiwanese acquirers and completion of a pre-closing restructure to transfer retained personnel and assets to other group companies. The conditions are expected to be satisfied within the next three months, leading to a closing date before September 2023.
The divestment will reduce Yourgene’s ongoing expenditure by approximately £0.5 million on an annualized basis and allow the company to focus on its strategic objectives. Yourgene Health Taiwan achieved a turnover of approximately £2.0 million for the year ended March 31, 2023, and was profit breakeven. The proceeds from the divestment will be utilized for general working capital purposes in the Asia-Pacific region.
Key terms of the divestment include an upfront payment of US$1 million on the closing date, a US$1 million loan payable within two years, and a potential earn-out consideration of up to US$2 million based on profit-related milestones over the next two calendar years post-completion. The loan agreement is secured against the shares of the subsidiary being sold.
As part of the divestment, INEX will become Yourgene’s NIPT distributor in Taiwan and Japan, serving as the group’s exclusive laboratory partner and service provider in Asia for an initial three-year term. Both companies will support each other operationally and administratively during a 12-month transitional period, ensuring an orderly separation of the businesses. Dr. Bill Chang, founder of Yourgene Health Taiwan and a member of Yourgene’s board, will remain with the group.
The divestment of Yourgene Health Taiwan’s laboratory is a crucial step in Yourgene’s strategic plan to focus on core products and geographies, extend the available cash runway, and rebuild shareholder value. Lyn Rees, CEO of Yourgene, expressed anticipation for the transaction’s completion and the establishment of a lasting partnership with INEX.
Further updates will be provided to shareholders once the divestment is finalized.