Psivida takes over UK subsidiary

Perth-based nano-biotech company Psivida (ASX:PSD) has acquired 100 per cent ownership of its UK subsidiary PsiMedica in an AUD$57.8 million deal aimed at accelerating development of its BioSilicon technology.

Psivida investor relations manager Josh Mann said the move should also make the company more attractive to big institutional investors as it contemplates listing in London and on the US Nasdaq in around 12 months' time.

Mann explained that institutional investors had been wary of the company's complex holding structures -- until now, Psivida has served as a holding company, with PsiMedica as its operating subsidiary.

Psivida has bought out all the PsiMedica shares owned by its majority shareholder and joint venture partner QinetiQ. QinetiQ, which is majority owned by the UK government, and the largest research agency in Europe, will become Psivida's largest shareholder, with 17.6 per cent of its issued capital.

Subject to Foreign Investment Review Board approval, Psivida will seal the deal by issuing 49.1 million shares at AUD$1.09 each.

QinetiQ will be receive 35.1 million shares, representing 90 per cent of its payment, plus $4.32 million in cash for the remaining 10 per cent for its holdings. Minority shareholders, including PsiMedica management, SGH Technology Ventures and Biotech Research Ventures will receive Psivida shares only.

Psivida said the $4.32 million cash payment to QinetiQ was part-repayment for cash contributions during the company's early development.

The company said the acquisition value of PsiMedica shares not already owned by Psivida was negotiated on the basis of PsiMedica's status as a privately held company, and Psivida's position as a controlling shareholder with pre-emptive rights.

The valuation also took into account Psivida's prior acquisition, development and enhancement of the BioSilicon diagnostics technology platform.

MD Gavin Rezos said Psivida was pleased with the more simplified ownership structure, under which PsiMedica and PsiOncology will operate as wholly-owned subsidiaries.

"It is an outcome that both shareholders and investors have been looking for and will also broaden Psivida's appeal with institutional investors, particularly as Psivida looks to list both in the US and the UK," Rezos said.

According to today's announcement, Psivida will maintain a strong working relationship with QinetiQ.

QinetiQ's investment director, Stephen Lake, will become a non-executive director of Psivida, and the company will also look for a US-based non-executive director.

QinetiQ has agreed to hold more than half of its shareholding, or 19.76 million shares, in escrow for the next 12 months, while other founding PsiMedica shareholders will hold 1 million shares, 50 per cent of their shares in escrow for six months.

Psivida shareholders will be asked to approve the acquisition at a general meeting at the end of July.