ML Laboratories to buy Quadrant in £47m deal

ML Laboratories confirmed yesterday it will acquire Quadrant Technologies, which develops and makes products for inhalers, for £47m.

ML Laboratories confirmed yesterday it will acquire Quadrant Technologies, which develops and makes products for inhalers, for £47m.

The deal will double the size of the biotech and turn it into a profitable company. Quadrant was spun out of the Irish pharmaceuticals company Elan two years ago via a management buyout and registered a pre-tax profit of £1.3m last year.

According to City analysts, the combined company will generate net income of £8.5m before goodwill and amortisation in its first full year to September 2006. The tie-up will see ML focus on developing products for respiratory diseases. Quadrant, which makes powder drugs for inhalers, fits with ML's Innovata Biomed division which produces inhalers.

The biotech group also announced yesterday that it will buy out minority shareholders at Innovata Biomed, who hold 18.75 per cent of the company. The £1.85m transaction gives it full control of the unit. In an attempt to put its loss-making past behind it, ML plans to change its name to Innovata. It will relocate to Nottingham, where Quadrant is based.

ML shareholders hope that the acquisition will herald a turnaround at the company. Over the past decade the group has raised more than £120m from investors and paid nothing out. At the peak of its powers in 2000, ML was worth more than £1bn and its shares traded at more than 180p. They closed 1p higher at 21.75p yesterday.

Of the total £47m which ML plans to spend on buying Quadrant, £19.5m will be paid in cash. The company's broker, Code Securities, will raise this sum via a placing of 137 million new ML shares at 19p.