LONDON, UK: Animalcare Group plc (AIM: ANCR) has reached agreement in principle to sell its 33.34% equity stake in STEM Animal Health Inc. (STEM) to Dechra Pharmaceuticals Limited for a total cash payment of US$4.7m.
STEM is currently owned by Animalcare and Canada-based Kane Biotech Inc.
Other items covered by the agreement will bring the total potential monetary value of the deal for the Group to approximately US$5.4m.
The sale of the minority stake secures a positive return on investment for Animalcare while further strengthening the Group’s cash position following the disposal of Identicare announced on 28 February 2024.
STEM was established in September 2020 as a joint venture by Animalcare and Kane Biotech with a focus on treating biofilm-related ailments in animals.
Under that agreement, Animalcare was granted rights to commercialise products based on Kane Biotech’s coactiv+ and DispersinB technology in global veterinary markets outside the Americas.
Under the terms of the Agreement, the existing licence and distribution agreement with STEM will be extended to allow Animalcare access to all channels in Europe and the UK.
This means Animalcare can maximise the value of the dental franchise through both veterinary and retail channels including via e-commerce.
In addition, Animalcare will maintain influence over the choice of new product development options associated with the licensed intellectual property through a newly formed joint innovation team with Dechra and Kane Biotech.
Completion of the transaction requires the consent of more than 50% of the shareholders of Kane Biotech.
Chief Executive Officer of Animalcare, Jenny Winter said: “This transaction offers value for Animalcare on several levels. Not only have we secured an attractive return on our equity investment in STEM that adds to our investment firepower, we have gained enhanced commercial licensing rights that grant us more options to reach pet owners in these key markets.
Further into the future, I’m also excited about the potential to accelerate development of new biofilm-targeting products by combining the knowledge and resources of all three parties.”