Just days after admitting that talks were ongoing about a possible acquisition of “a profitable company involved in the development of inhaled therapies” [[08/06/05g]], ML Laboratories has now announced that it is to buy fellow UK firm Quadrant Technologies.

Under the terms of the deal, which is valued at around £46.7 million pounds, the company will pay £19.5 million in cash for Quadrant with the remainder of the value contributed in shares. This will involve the raising of £26 million through a vendor placing and open share offer of 137.5 million new shares.

It has also acquired the 18.75% minority stake it did not already own in subsidiary Innovata Biomed for £1.85m in cash and shares. As a result of these transactions, the buyer’s board added that “ML Labs” no longer reflects the business of the group and has proposed a name-change to Innovata.

Explaining the rationale behind the deal, ML said: “Quadrant represents an excellent strategic fit for the newly re-focused ML business” as it will now have “a full complement of capabilities to tackle new products for respiratory disease and inhaled therapeutics.” What’s more, Quadrant is profitable, with a royalty stream from a licence with Baxter and income generated from pharmaceutical company alliances with firms like Bristol-Myers Squibb and GlaxoSmithKline.

The deal has been welcomed by ML shareholders who have faced some tricky times in the last few years. In 2004, the company admitted it had become increasingly dependent on milestone payments from licensing partners and was struggling to fund R&D. A number of projects were abandoned, but shareholders were unhappy and demanded, and got, the removal of the management team led by Stuart Sim earlier this year.

The shareholders will also be reasonably pleased with the latest set of financials issued by ML which show that turnover more than doubled in the six months to March 31 to £6.4 million compared to £2.9 million in the like, year-earlier period. Pretax losses were down to £4 million from £6 million.