News Releases
Notice regarding acquisition of U.S. Ambry Genetics Corporation by joint investment
July 6, 2017
To whom it may concern,
Company Name: Konica Minolta, Inc.
Representative: Shoei Yamana, President and CEO
Stock Exchange Listing: Tokyo (First Section)
Local Securities Code Number: 4902
Contact: Mami Iwamoto, General Manager, Corporate Branding Division
Tel: (81) 3-6250-2100
Konica Minolta, Inc. (the “Company” or “Konica Minolta”) is pleased to announce that today, it entered into a definitive agreement to acquire Ambry Genetics Corporation (California, USA, “Ambry”) by joint investment with Innovation Network Corporation of Japan (“INCJ”), based on the Company’s board resolution of May 26, 2017.
1. Purpose of Transaction
With the world's most advanced genetic diagnostic technology, advanced product development capabilities, diversified testing options, high examination processing capacity, and overwhelming strength in genetic counselor channels, Ambry has established its position as a leader in the U.S. genetic testing market in oncology and other diseases, including heart and neurological disease and respiratory diseases such as cystic fibrosis. To date, Ambry has conducted more than one million genetic tests and has identified over 45,000 mutations in 500 types of genes.
This acquisition is the first in a series of strategic initiatives to secure a leading position for Konica Minolta in the precision medicine (personalized medical treatment) field. Konica Minolta has committed to providing the most advanced genetic diagnostic technology in the world using cutting edge IT analytical technology that makes full use of bioinformatics, and through Ambry’s state-of-the-art testing laboratory, the ability to offer large-scale services. Furthermore, by combining Konica Minolta's High Sensitive Tissue Testing (HSTT), proprietary protein-sensitive quantitative detection technology, with Ambry's genetic diagnostic technology, together Konica Minolta and Ambry have two core technologies indispensable for patient grouping and drug development. Based on the technologies of both companies, Konica Minolta will ensure further growth and will become a global leader by expanding Ambry’s services to Japan, Asia, and Europe from the US.
2. Transaction Summary
Under the terms of the agreement, Konica Minolta will acquire Ambry shares through its wholly-owned U.S. healthcare distributor company Konica Minolta Healthcare Americas, Inc. (“KMHA”) with INCJ, where KMHA will acquire 60% and INCJ will acquire the remaining 40%, by an all-cash transaction.
The transaction is expected to close in the third quarter of 2017, subject to necessary regulatory approvals. Ambry would thereafter become a consolidated subsidiary of Konica Minolta. subject to a reverse triangular merger between Konica Minolta Geno., Inc. 1 and Ambry, where the latter is the surviving entity.
1 100% subsidiary (“SPC2”) of Konica Minolta PM., Inc. (“SPC1”), which is 60% owned by KMHA and 40% by INCJ. INCJ has the option to sell INCJ’s 40% ownership in SPC1 to the Company as per an agreement between the two parties.
The transaction scheme and post-transaction structure is as follows:
| KMI | Konica Minolta, Inc. |
|---|---|
| KMHUS | Konica Minolta Holdings U.S.A., Inc. (US holding company) |
| KMHA | Konica Minolta Healthcare Americas, Inc. (US distribution company) |
| INCJ | Innovation Network Corporation of Japan |
| SPC1 | Konica Minolta PM., Inc. (SPC established from join investment by KMHA and INCJ) |
| SPC2 | Konica Minolta Geno., Inc. (special purpose company formed under SPC1 for the merger with Ambry, non-surviving entity of the merger) |
| Ambry | Ambry Genetics Corporation (surviving entity of the merger) |
3．About the Acquiring Entities
| (1) Name | Konica Minolta Holdings U.S.A., Inc. |
|---|---|
| (2) Location | New Jersey, U.S.A. |
| (3) Representative | Toshimitsu Taiko, CEO |
| (4) Business | US holding company |
| (5) Capital | USD 968,264,000 |
| (1) Name | Konica Minolta Healthcare Americas, Inc. |
|---|---|
| (2) Location | New Jersey, U.S.A. |
| (3) Representative | David L. Widmann, President and CEO |
| (4) Business | Sales of medical imaging diagnostic systems in the US and other countries |
| (5) Capital | USD 5,300,000 |
4. About Ambry Genetics Corporation (surviving entity)
| (1) Name | Ambry Genetics Corporation | |||
|---|---|---|---|---|
| (2) Location | Aliso Viejo, CA, U.S.A. | |||
| (3) Representative | Charles L.M. Dunlop, Chairman and President | |||
| (4) Business Description | Provider of genetic diagnostic solutions for diseases and clinical specialties | |||
| (5) Capital | USD 102 | |||
| (6) Year Founded | 1999 | |||
| (7) Major shareholder and shareholding ratio | Charles L.M. Dunlop 44.27% Others 55.73% |
|||
| (8) Relationships with the Company | Capital Relationship | None | ||
| Personnel Relationship | None | |||
| Business Relationship | None | |||
| (9) Consolidated financial results of the company in the last three years (US GAAP) 2 (USD in thousands unless otherwise specified) |
||||
| Fiscal term | Ending June, 2014 | Ending June, 2015 | Ending June, 2016 | 1/7/2016 ? 31/3/2017 estimates 3 |
| Shareholders’ equity | 30,179 | 53,686 | 84,730 | 75,624 |
| Total Assets | 48,463 | 100,289 | 132,734 | 115,402 |
| Net Asset per share (USD) | 26.9 | 48.5 | 83.1 | 74.1 |
| Revenues | 96,777 | 161,872 | 287,943 | 162,525 |
| Income from operations | 40,149 | 60,371 | 139,711 | 19,760 |
| Adjusted EBITDA 4 | 46,570 | 73,619 | 159,468 | 50,084 |
| Net Income | 26,423 | 39,671 | 86,389 | 5,119 |
| Net Income per share (USD) | 23.5 | 35.9 | 84.7 | 5.0 |
2 Consolidated basis
3 Numbers are estimated based on the most recent information provided by Ambry as of this date for the period of July 1, 2016 to March 31, 2017, and therefore are non-audited
4 Consolidated EBITDA adjusted for extraordinary costs by Ambry management and not based on USGAAP
5．About the Sellers
| (1) Name | Charles L.M. Dunlop* |
|---|---|
| (2) Place of residence | United States |
| (3) Relationship | None |
※ Ambry shares will be acquired from over 150 individuals including Charles L.M. Dunlop. There is no capital, personnel, business relationships between the Company and any of the sellers
6．Acquiring shares, price and changes in ownership
| (1) Number of shared before transaction | － (Number of voting rights： －) (Proportion of voting rights：－%) |
|
|---|---|---|
| (2) Number of acquiring shares | 1,020,792 5 (Number of voting rights：1,020,792) |
|
| (3) Transaction cost | Shares of the company etc. | USD 800 million 6 7 |
| Advisory costs etc. (estimate) | JPY 2.2 billion | |
| Total (estimate) | JPY90.2billion (@USD1=JPY110) | |
| (4) Number of shares after transaction | 1,020,792 8 (Number of voting rights：1,020,792) (Proportion of voting rights：100%) |
|
5 Total number of Ambry shares acquired by the Company and INCJ through SPC1
6 Subject to price adjustments in accordance with the definitive agreement
7 A performance-based earn-out of up to US$200 million may be paid out, based on Ambry’s fiscal performance in the next two years
8 Total number of Ambry shares owned by the Company and INCJ through SPC1
7．Schedule
| (1) Decision by Representative Executive Officer | July 6, 2017 |
|---|---|
| (2) Signing Date | July 6, 2017 |
| (3) Closing Date | October 2017 (projected)* |
* Subject to antitrust approvals in US and other applicable countries.
8．Future outlook
The impact of the transaction on the Company’s future performance is currently under review. Any findings that require disclosure will be reported in an appropriate and timely manner.