Creo Medical, a prominent life sciences company based in Chepstow, Wales, has finalised an agreement to sell a 51% stake in its European subsidiary, Creo Europe, to Micro-Tech, a leading Chinese firm in the endoscopic medical devices market. The deal, valued at £31m on a cash and debt-free basis, reflects a significant strategic move for Creo Medical, enhancing its growth prospects in the Asia Pacific region.
Creo Medical, listed on AIM, specialises in minimally invasive surgical endoscopy for pre-cancer and cancer patients. The sale to Micro-Tech, which boasts annual sales of approximately £250m, is anticipated to be completed early next year, pending regulatory approvals in both China and Europe. Upon completion, Creo Medical is expected to receive £25.2m in cash proceeds.
The financial boost will enable Creo Medical to further invest in its core business operations, including its Kamaptive arm, aligning with its commercial and operational goals. For the fiscal year ending 31 December 2023, Creo Europe reported pre-tax profits of around £3m and net assets, excluding cash balances, of approximately £7.4m.
Craig Gulliford, Chief Executive of Creo Medical, emphasised the strategic alignment and growth potential this partnership fosters. ‘Micro-Tech is not only China’s leading endoscopic instrument company, but also a significant global brand in the GI Endoscopy market. The sale represents an excellent strategic partnership for us and will support our continued commercial growth in the Asia Pacific region through product registration and co-branding in China. Furthermore, Creo Europe will also gain access to the wider Micro-Tech product portfolio and access to a complementary range of products under the Creo brand, ensuring the same confidence in long-term supply to our developing global sales channels,’ he stated.
Gulliford further highlighted the value of retaining a significant interest in Creo Europe post-transaction, indicating no plans to divest the remaining 49% stake. ‘We are delighted to be able to retain a significant interest in Creo Europe following the transaction, whilst generating a return on our initial investment, strengthening our balance sheet to invest in our core strategy. The potential of this partnership to accelerate growth through Creo Medical Europe, with a harmonised brand and product strategy across our global commercial operations outside Europe, is really exciting and will enable us to enhance our customers’ procedure repertoire and further strengthen the clinical benefits we can deliver for patients,’ he added.
Xiaohui Long, Chairman of Micro-Tech, also expressed optimism regarding the partnership. ‘As a leading Chinese manufacturer of endoscopic diagnostic and therapeutic devices, Micro-Tech has been continuously expanding its overseas sales channels and seeking valuable partnerships for innovative products. Creo’s subsidiary, Creo Europe, is a key medical device distributor in Western Europe, and its sales channels and products are highly complementary to those of Micro-Tech. Upon completion of this acquisition, Micro-Tech will be able to introduce more products to Creo Europe, empower Creo’s R&D and market expansion efforts, and bring new momentum to the development of both companies. This acquisition will be mutually beneficial to all parties, helping us achieve our shared growth goals,’ he remarked.
The sale of a majority stake in Creo Europe to Micro-Tech marks a pivotal strategic advancement for Creo Medical. This deal not only provides substantial financial backing for Creo’s core business but also positions the company for significant growth and innovation within the global medical devices market. By retaining a significant minority stake, Creo Medical remains poised to benefit from the synergies and expanded market opportunities this partnership with Micro-Tech will undoubtedly bring.