Genesis Biomedical and ENSI-MED to Merge

Genesis Biomedical (ASX: GBL) has signed a Heads of Agreement with ENSI-MED Manufacturing to acquire 100 per cent of the issued capital of the Canberra-based retractable syringe manufacturer.

ENSI-MED, a US-Australian consortium, announced last month that it had acquired the intellectual property and assets of defunct Melbourne-based retractable syringe manufacturer Uni-ject Australia for AUD$4 million.

Worldwide, the market for retractable syringes is around US$15 billion. Uni-ject's syringe was one of the first to be developed and holds FDA and TGA approval.

But the company went into voluntary administration in 2002, despite exports to ten countries including the US, Japan and China, and a state-of-the-art manufacturing facility.

The merger, which is subject to shareholder approval, is likely to be completed by early February 2004, according to Benjamin McGainey III, CEO of ENSI-MED's US operations.

Genesis plans to seek approval to consolidate its share capital on the basis of 26 shares for every 80 shares issued. The consideration payable by Genesis will be the issue of approximately 12.7 million fully paid post consolidation shares plus approximately 17.3 million options exercisable at 20 cents. In addition, a further 22.75 million shares may be issued to the vendors of ENSI-MED based on meeting a number of revenue, earnings and market capitalisation milestones.

The company will also look to raise AUD$1.2 million in a placement to provide capital for the re-establishment of manufacturing and sales of the syringe.

McGainey said there was a perfect fit between the two companies.

"Genesis is in the biotechnology space already so they understand the business," he said.

The plan, he said, would be to increase the Australian manufacturing plant's capacity, and build up the export market for the product. Additional manufacturing facilities would be established overseas to meet demand as required, he said.

Genesis shares fell more than 25 per cent today in response to yesterday's announcement. At the time of writing, shares were trading at AUD$0.085.