Globe

Acquisition of Techtran Group Limited and appointment of Executive Directors

20 Jan 2005

IP2IPO Group plc ("IP2IPO" or the "Company") (AIM: IPO), the intellectual property company that commercialises university technology, is pleased to announce it has completed an acquisition of the entire issued share capital of Techtran Group Limited ("Techtran") (the "Acquisition"). IP2IPO originally acquired 20% of Techtran’s then issued share capital in July 2004. The Acquisition places an implied value of £20 million on Techtran and the total consideration payable under the Acquisition is £16.1 million.

The consideration, payable immediately, is 1,862,610 IP2IPO Ordinary shares of 10p each (the "Consideration Shares") and £4 million in cash. At the date of Acquisition, Techtran has approximately £1.8 million of cash on its balance sheet. As of 31 December 2004, Techtran had net assets of approximately £1.7 million and for the eight months to 31 December 2004, recorded losses of £0.7 million.

Background to the acquisition Techtran was set up in 2002 to commercialise university intellectual property under a long-term technology commercialisation contract with the University of Leeds. Under the terms of the contract Techtran receives a significant (30%) interest in spin-out companies created and technology licences negotiated, in return for the provision of technology transfer services to the University.

Under the terms of the commercialisation partnership with the University of Leeds, Techtran has built a portfolio of interests in 13 spin out companies and has developed a strong pipeline of new opportunities. Techtran has concentrated on forming early stage companies with commercially focussed business models. As a result, a large proportion of the portfolio is currently revenue generating at a break-even or profitable level. The University of Leeds was rated as one of the UK's top ten universities for research in the most recent national Research Assessment Exercise. It has an annual turnover of some £340 million and in 2003 had total research income of more than £100 million. It has been a pioneer of intellectual property commercialisation in the UK and was the first UK university to set up a dedicated technology transfer function. One of the University's most successful spin-out companies has been GMAP, which developed geographical modelling software to identify patterns in customer behaviour.

Reasons for the Acquisition IP2IPO believes that the Acquisition is an important and very positive strategic step.

  • The Acquisition of Techtran has resulted in the enlarged group having a partnership with the University of Leeds, which is highly complementary to IP2IPO's existing partnerships with the Universities of Oxford, Southampton, York and King's College London. IP2IPO's strategy is to partner with the UK's top research-led universities and the University of Leeds not only has a strong reputation for the quality of its research but is one of the top ten universities in the UK by research income.
  • Techtran has established a strong team to manage its partnership with the University of Leeds and that team has already built up a track record of successfully identifying new IP opportunities, forming spin-out companies and helping those spin-out companies to develop.
  • As a result of the Acquisition, IP2IPO and the University of Leeds have already entered into discussions to extend the scope of the partnership with respect to the establishment of a £5 million venture capital fund for University of Leeds spin-out companies.
  • Techtran has an exciting portfolio of existing interests in spin-out companies from the University of Leeds and IP2IPO anticipates that these interests will result in significant cash returns for the enlarged group.
  • The Acquisition consolidates IP2IPO's position as the UK 's leading university IP commercialisation company.

Lock-ins The sellers of Techtran have agreed to certain lock-in arrangements as follows:

  • Save in limited circumstances, staff and management of Techtran with a continuing role in the enlarged group have agreed not to dispose of the 284,041 Consideration Shares that they receive directly, without the consent of IP2IPO for a period of 2 years following the Acquisition.
  • Save in limited circumstances, the other sellers of Techtran have agreed not to dispose of the 1,578,569 Consideration Shares which they receive directly, without the consent of IP2IPO for a period of 1 year following the Acquisition.

Appointment of directors Mr Alan John Aubrey, 43, (Techtran's former Chief Executive Oficer) and Dr Alison Margaret Fielding, 40, (Techtran's former Chief Operating Officer) have today joined the Board of IP2IPO. Alan Aubrey and Alison Fielding will receive 150,973 and 75,526 Consideration Shares directly, as a result of the Acquisition.

Both Alan Aubrey and Alison Fielding own shares in Axiomlab Group plc, a company which, as a result of the Acquisition, has acquired an indirect interest (through certain of its subsidiaries) in 1,483,217 Consideration Shares. Prior to joining Techtran, Alan Aubrey was a partner in KPMG where he specialised in corporate finance advice to technology-based growth businesses. He has worked on over 75 transactions, helping businesses to raise more than £200m. In 2001, Alan became a director in Axiomlab Group plc, Techtran’s former parent company where he also led the negotiations with the University of Leeds. Prior to her role at Techtran, Alison Fielding spent five years at McKinsey & Co, where she consulted primarily to the pharmaceutical and health care sectors. Previously, Alison spent four years as a development chemist for Zeneca, performing technical roles in the specialty chemicals and agrochemicals divisions.

In that position she gained significant experience of developing theoretical research into commercially useful technology. The following information is provided in accordance with paragraph 15 and schedule 2f of the AIM Rules: Alan Aubrey: (a) in addition to Techtran Group Limited and its subsidiary companies, has held the following directorships during the past 5 years: Axiomlab Group plc, Empiricom Technologies Limited, Energetix Group Limited, Thermetica Limited, Flexisols Limited, Proactis Group Limited and KPMG; (b) has no unspent convictions in relation to indictable offences; (c) has not had any bankruptcy order against him or entered into any voluntary arrangement; (d) has not been a director of any company which has been placed into receivership, compulsory liquidation, creditors’ voluntary liquidation, administration or which has entered into any company voluntary arrangement or any composition or arrangement with its creditors generally or any class of its creditors, at the time of or within 12 months preceding such event; (e) has not been a partner of any partnership which has been put into compulsory liquidation, administration or entered into partnership voluntary arrangements, at the time of or within 12 months preceding such event; (f) has not had a receivership of any asset or of a partnership where he was a partner, at the time of or within 12 months preceding such event or (g) has not been publicly criticised by any statutory or regulatory authorities (including recognised professional bodies) or ever been disqualified by a court from acting as a director of a company or from acting in the management of the affairs of any company. Alison Fielding: (a) has held the following directorships during the past 5 years: Kiltrock Limited; (b) has no unspent convictions in relation to indictable offences; (c) has not had any bankruptcy order against her or entered into any voluntary arrangement; (d) has not been a director of any company which has been placed into receivership, compulsory liquidation, creditors’ voluntary liquidation, administration or which has entered into any company voluntary arrangement or any composition or arrangement with its creditors generally or any class of its creditors, at the time of or within 12 months preceding such event; (e) has not been a partner of any partnership which has been put into compulsory liquidation, administration or entered into partnership voluntary arrangements, at the time of or within 12 months preceding such event; (f) has not had a receivership of any asset or of a partnership where she was a partner, at the time of or within 12 months preceding such event or (g) has not been publicly criticised by any statutory or regulatory authorities (including recognised professional bodies) or ever been disqualified by a court from acting as a director of a company or from acting in the management of the affairs of any company.

Commenting on today's announcement, David Norwood, Chief Executive Officer of IP2IPO said: "The acquisition of Techtran is excellent for IP2IPO. Techtran's partnership with the University of Leeds is the group's fifth top-tier university relationship and further consolidates our position at the forefront of a very exciting trend."