LMA Completes Acquisition of Wolfe Tory Medical, Inc.

Singapore – On 20 December 2010, Mainboard-listed LMA International N.V. (“LMA”), the world’s leading provider of supraglottic airway management devices announced that it was in advanced negotiations for the acquisition of Wolfe Tory Medical, Inc (“WTM”), a Salt Lake City, Utah, USA based manufacturer and distributer of medical devices. LMA is pleased to announce that the parties, WTM and LMA’s subsidiary, LMA North America, Inc (“LMANA”), have now signed and completed an agreement (the “Agreement”) dated 30 December 2010 for this transaction (the “Acquisition”) on terms outlined in the previous announcement and as further set out below.

The cash consideration for the Acquisition amounts to US$13.1 million, plus additional deferred payments based on the 2012 trailing sales of two new innovative products that will be introduced in 2011. Subsequent to the Acquisition, WTM is now a subsidiary of LMANA. The Acquisition does not include Wolfe Tory Medical’s critical care product, AbViser, as this is not part of LMA’s target market.

Under the terms of the Agreement, LMANA will acquire the business relating to WTM, including the product line relating to the Mucosal atomization Devices (MAD), Canyons, OptiSpray and VaxINator products. The MAD atomization family and the AbViser intra-abdominal pressure monitoring devices have become leaders in their market segments with strong brand recognition. Both product lines emerged because practicing physicians recognised a unique clinical situation for which a new and innovative solution could enhance patient care.

WTM has entered into a Supply and Manufacturing Agreement with a partnership (the “Partnership”) made up of former WTM shareholders to produce the AbViser Intra-Abdominal Pressure Monitoring devices for the Partnership. WTM will also provide back-office and other support services to the Partnership under a Services Agreement. In addition, under the Services Agreement, two former executives of WTM have agreed to provide certain consulting services to WTM.

In recent years, LMA has sold WTM’s products successfully in Australia, New Zealand, Germany and Italy with excellent results. The newly acquired MAD products will now be distributed through LMA’s U.S. subsidiary, LMANA. The products will also be sold through LMA’s highly regarded International Distributor network that reaches over 100 countries worldwide.

The MAD atomization family is sold primarily to physicians in two of LMA’s strongest call points – anaesthesiologists and emergency room physicians – and complement and strengthen LMA’s product portfolio. With this acquisition, LMA expects to be able to increase the sales growth of these products through its direct sales operations, including the additional sales from three new products to be introduced in January 2011: The MADgic Airway, which combines atomization and oxygen delivery in a one of a kind fiberoptic airway. The MADgic Airway provides anaesthesiologists with the ability to deliver atomized topical anaesthetic as they insert the airway and deliver oxygen if required. The VaxINator device, a low cost intra-nasal drug delivery device; and the OptiSpray, an atomizer intended for surgical uses.

Wolfe Tory Medical is a profitable company and in the first year post acquisition, the transaction is anticipated to be accretive to LMA’s EBITDA but additional amortisation of acquired intangible assets will reduce the Net Income benefit of the transaction to a broadly neutral impact on earnings per share in year one but will add to earnings per share in the second year.

The consideration of US$13.1 million will be paid in cash. US$12.5 million has been paid on the closing of the transaction and the remainder of the consideration will be held in escrow until 30 June 2012 (to fund indemnification claims, if any, made by LMA).

The consideration of US$13.1 million was arrived at in an arm’s length negotiation, taking into account a multiple of sales. The deferred payment, which will be based on a multiple of sales of two new products, the VaxINator and the OptiSpray, for the two-year period ending 31 December 2012, will be paid in cash by LMANA prior to 31 March 2013, depending on the performance of these products. The Acquisition will be funded from the Company’s cash balances.

The book value of the net tangible assets being acquired is approximately US$1.4 million, but is subject to finalisation of the balance sheet of the business as at 30 December 2010. No open market valuation of the assets being acquired has been obtained. The net profit attributable to WTM, which is being acquired, was approximately US$1.3 million, based on extracts from management accounts, for the nine months ended 30 September 2010.

About LMA

Incorporated in the Netherlands Antilles in 1998, LMA listed on the Mainboard of the Singapore Exchange in March 2005. LMA designs, develops, markets and distributes medical equipment, principally the LMA laryngeal mask airway range of supraglottic airway management devices. These devices are used by physicians to allow respiration, provide ventilation to, and support the airway of patients undergoing surgical procedures and life-saving interventions. Since its first product, the LMA Classic, was approved by the FDA for use in the United States in 1991, LMA's growth has been driven by the development of innovative products, geographic expansion, and increased customer awareness of the LMA laryngeal mask airway as an alternative airway management device. LMA has established a leading position in this growing market.


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