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Instem snaps up Swiss life sciences software company for £11.4mln

Published: 08:31 01 Sep 2021 BST

Instem PLC - Instem snaps up Swiss life sciences software company for £11.4mln

Instem PLC (AIM:INS) bought Swiss competitor, the life sciences software company PDS Pathology Data Systems Ltd, for 14.25mln Swiss franc (£11.4mln) in a deal expected to be immediately earnings enhancing.

PDS provides software for non-clinical study management and software and outsourced services for regulatory submissions using the Standard for the Exchange of Non-clinical Data (SEND).

Instem said the acquisition extends it Study Management and SEND market share. The deal enables it to concentrate investment on a single line of SEND and preclinical study management products, removing duplication in the market, and strengthens its relationship with joint clients, as 70% of PDS's top 20 clients are already clients of Instem.

Some 35 PDS staff will be integrated into Instem’s operations and all of the combined workforce is expected to be retained.

“The acquisition will immediately increase Instem's operational capacity, providing an opportunity to combine teams operating in the significant United States, Swiss and Japanese markets,” the AIM-listed company said.

The consideration for PDS will be paid in a combination of cash and shares in Instem, comprising an initial payment of 4.7mln Swiss franc (£3.8mln) in cash and 3.5mln Swiss franc (£2.8mln) via the issue of 359,157 shares at 777 pence each. The consideration also comprises 3mln Swiss franc of seller loan repayments, 2mln Swiss franc to satisfy other net PDS liabilities and 1 mln Swiss franc of deferred consideration.

PDS reported a pretax profit of around £0.6mln for 2020, on sales of £5.1mln of which £1.8mln was recurring SaaS and software maintenance revenue. Net liabilities totalled £1.2mln at the year-end, including loans from shareholders of £2.4mln. These loans will be settled in full out of the proceeds received by PDS shareholders, Instem said.

"We are delighted to have completed our third acquisition of 2021 which, along with the company's strong organic growth, ensures that Instem is positioned as the foremost authority and driving force in generating, analysing and leveraging data from discovery through late-stage clinical trials,” said Instem CEO Phil Reason. 

"We have known the team at PDS for many years and are well aware of their industry standing. We have spoken on several occasions about a potential combination and are delighted that they have agreed to join us at Instem, at a time when both of our businesses and the life sciences market are thriving. We look forward to integrating the business and benefiting from the scale and increased reach that will further cement our leading market position".

PDS CEO Vicente Nogués, who is retiring following the acquisition, commented: "This was a natural next step in our quest to help clients do more and go further than ever before. Our mission, values and overall company cultures are aligned very well - which was the highest of priorities for PDS. 

"As part of Instem, our clients will now have access to the most comprehensive range of solutions found in the market today backed by excellent customer service, while our staff will enjoy additional opportunities for professional growth. Together, we are looking forward to advancing the ever-important mission of helping clients to bring their life enhancing products to market faster."

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