Landec Corporation (Nasdaq:LNDC), a materials science company that develops and markets patented polymer products for food, agriculture, personal care and drug delivery applications, today announced that it has acquired Lifecore Biomedical, Inc. from Warburg Pincus Private Equity IX, LP ("Warburg Pincus"). When acquired by Warburg Pincus in March 2008, Lifecore was comprised of two divisions, the Dental Division and the Hyaluronan Division. The Dental Division was merged into a Warburg Pincus portfolio company. The Hyaluronan Division, now Lifecore, based in Chaska, MN, is a leading supplier of premium hyaluronan-based biomaterials for the medical and veterinary markets. Lifecore hyaluronan biopolymers are used in a wide and ever-growing range of therapeutic treatments, including cataract surgery, degenerative joint disease, spinal defect filling, medical device coatings, cosmetic soft tissue enhancement and equine osteoarthritis, as well as in numerous research initiatives.
“The acquisition of Lifecore significantly advances our stated strategy to acquire a company that expands our capabilities in materials science, specifically in the area of biomaterials”
"The acquisition of Lifecore significantly advances our stated strategy to acquire a company that expands our capabilities in materials science, specifically in the area of biomaterials," said Gary Steele, Chairman and CEO of Landec. "Hyaluronic acid (HA) is naturally present in the skin, cartilage and fluid of humans and provides lubricating, connective and shock absorbing functions in both joints and soft tissue. Demand for premium, fermented hyaluronan in biomaterial applications is growing. We view Lifecore's hyaluronan biopolymers as a technology platform that can provide unique HA product innovations, as well as new products from potential synergies with Landec's existing Intelimer® polymers."
Lifecore's President and CEO, Dennis J. Allingham, added, "We welcome the strategic acquisition of Lifecore by Landec, which strengthens our commitment to the development of technically advanced hyaluronan-based specialty medical products that can offer treatment advantages and compatibility within the human body. We are excited about the potential opportunities to apply Landec's knowledge of polymer technology to our new product concepts as a means to expand our product offerings, bring greater value to our customers and attract market-leading partners."
Under the agreement, Landec acquired the stock of Lifecore for $40.0 million in cash and assumed debt of approximately $4.0 million. In addition, the agreement includes a future cash earn-out potential for Warburg Pincus of up to $10.0 million based on Lifecore achieving certain financial targets during calendar years 2011 and 2012. In conjunction with the acquisition, Landec secured bank financing of $20.0 million. The financing has a five year term with a fixed interest rate of approximately 4.2%. After the acquisition, Landec's cash and marketable securities balance will be approximately $50.0 million. As a result of this transaction, Landec will record approximately $2.9 million of acquisition related expenses during the fourth quarter of fiscal year 2010.