Regenerative implants manufacturer Osteopore (ASX:OSX) has entered into a binding asset purchase deed to acquire several distribution businesses.
The company says it plans to acquire 100% of the target businesses which include Lomic Korea Co, 3D Aesthetic Solutions, 3D Healthcare Solutions Co, and 3D Aesthetic Medical Equipment and Supplies Trading from Mr Lim Jae Hoon for $2.05 million.
Osteopore says the target businesses are currently responsible for distributing its products and have historically been the company’s top distributor groups, contributing about 40% to 45% of Osteopore’s total sales over the past few years. The sales are primarily related to the aesthetic market in South Korea, complemented by sales in Singapore, Thailand, Vietnam, and the Philippines.
In the agreement, Ostepore will acquire 100% of all business activities relating to the marketing, sales, and distribution of Osteopore products from the target businesses, including the sales teams, office premises, distribution networks, and business contracts. Osteopore expects these companies will be fully integrated into Osteopore shortly, with no disruptions expected to occur in regards to current business activities and sales during the process.
“we will control the entire process from manufacturing, marketing and direct retail sales”
Commenting on the binding asset purchase deed, Osteopore Chief Executive Officer, Goh Khoon Seng said: “This acquisition will allow Osteopore to be vertically integrated across an estimated 40% to 50% of our businesses. This means we will control the entire process from manufacturing, marketing and direct retail sales.
The potential benefits of this are highly encouraging, including the immediate creation of a proven direct sales team, direct access to an extensive network of hospitals and surgeons, along with the anticipated benefit of supercharging revenue and increasing margins.”
Also commenting, Osteopore Executive Chairman Mark Leong adds: “We are enthused as this transaction marks our first acquisition since listing on the ASX, adding complementary synergistic value and exciting organic growth to complement the strong traction seen to date.
This sets us on an accelerated path towards positive cashflow. This is the start of an exciting chapter and we will continually seek more opportunities to further boost our trajectory.”
Osteopore believes that by acquiring the target businesses, the company will add additional revenue to its top line. It also expects an increase in margins will be achieved due to the company selling its products directly to customers rather than selling wholesale to the target businesses.
Furthermore, the company expects this will lead to greater revenue per product sold, and is a direct result of Osteopore’s strategy to become cash flow positive and profitable at a faster rate to complement its steady organic growth.
Other benefits of this agreement includes the creation of a fully dedicated sales team with localised knowledge in marketing and distribution in South Korea and key Southeast Asian markets, the creation of an internal business unit with expertise in the aesthetic segment to lead its global aesthetic market strategy in 2023, as well as direct relationships with customers to better understand and adapt to the needs of customers.
The company reports it will now work with Mr Lim Jae Hoon towards satisfying the conditions precedent to the asset purchase deed and completing the acquisition. Following this, the company will execute its post acquisition integration process aiming to bring the target businesses together smoothly.
Osteopore is an Australian and Singapore-based medical technology company commercialising a range of products engineered to facilities natural bone healing across multiple therapeutic areas. The company’s patented technology fabricated specific micro-structured scaffolds for bone regeneration through 3D printing and bioresorbable material.
These scaffolds are manufactured using a priopriatary manufacturing technique with a polymer that naturally dissolves over time to leave only natural, ‘healthy’ bone tissue, which ‘significantly’ reduces post-surgery complications associated with permanent bone implants.