SYDNEY, AUSTRALIA: ALS Limited (ASX: ALQ) has announced the acquisition of the remaining 51% stake in Nuvisan Pharma Holding GmbH, a leading European contract research organization (CRO).

The acquisition, which includes Nuvisan GmbH and Innovation Campus Berlin (ICB), comes at no additional cost and is set to take effect on March 31, 2024, for financial reporting purposes.

Nuvisan, which reported revenues of approximately A$245 million in 2023, operates two distinct entities: Nuvisan GmbH, focusing on pre-clinical and clinical development services, and ICB, specializing in drug discovery services.

The strategic rationale behind the acquisition is clear. ALS aims to leverage full control of Nuvisan to drive earnings growth and enhance shareholder value. The move is timely, as Nuvisan is poised to benefit from a potential market recovery and long-term demand in the CRO sector.

With this acquisition, ALS not only strengthens its footprint in Western Europe but also gains a robust platform to tap into the burgeoning global pharmaceutical market. This complements ALS’s existing pharmaceutical businesses and augments its capabilities, geographical reach, and client network.

A fair value adjustment process for the initial 49% investment in Nuvisan has begun, with an expected write-down of the majority of its current carrying value, which stood at approximately A$258 million as of March 2023. Details of this adjustment will be disclosed in the FY24 Financial Report due in May 2024.

Furthermore, ALS is set to embark on a transformation program aimed at increasing revenue and enhancing profitability across both Nuvisan entities. The program will focus on operational improvements, cost rationalization, and a re-focused business development strategy. The estimated restructuring costs are projected at around €20 million over two years, offset by anticipated annual cost savings of approximately €25 million, primarily within the ICB business.

The transformation project is scheduled to commence in mid-2024 and conclude in 2026. The acquisition’s impact will be reflected in ALS’s financial statements as of March 31, 2024, with trading results beginning from April 1, 2024.

Malcolm Deane, CEO and Managing Director of ALS, expressed confidence in the acquisition, stating, “Taking full ownership of Nuvisan marks a significant advancement in our Life Sciences strategy. It grants us access to an attractive market laden with growth opportunities and further develops our Pharmaceutical platform.”

Deane also highlighted the two-year transformation program designed to stimulate sales growth and implement cost-cutting measures to boost profitability.

The management team at ALS is committed to enhancing Nuvisan’s financial performance and delivering project returns in the low to mid-teens range over the medium to long term.