JSE-listed Life Healthcare Group, through its wholly owned indirect subsidiary in the UK, Life Medical Group Limited (LMGL), has entered into binding agreements with Lantheus Neurology UK, a wholly owned subsidiary of Lantheus Holdings for the sale of 100% of the issued share capital of LMI Limited and its subsidiaries, collectively known as Life Molecular Imaging (LMI).

The total purchase consideration of $750-million, about R13.9-billion, includes an upfront payment of $350-million and earnouts totalling a further $400-million, contingent on achieving future milestone sales of LMI products through to 2034.

Life Healthcare says it expects net proceeds from the upfront payment, after settling the LMI Management Scheme, Piramal Payment and transaction costs, will be about $200-million, or about R3.7-billion.

Subject to the necessary approvals, the company intends to return the net proceeds to shareholders.

“This proposed transaction presents a significant opportunity for our shareholders to immediately unlock considerable value in LMI. By realising a premium over LMI's estimated value reflected in our share price, shareholders can expect a highly attractive return on this investment.

“Moreover, this transaction mitigates the execution risks associated with LMI’s business plan by partnering with a credible partner,” says Life Healthcare Group CE Peter Wharton-Hood.

He explains that Life Healthcare is not a natural long-term owner of LMI.

He says Lantheus, with its extensive experience and expertise in nuclear medicine, is well-positioned to realise the full potential of LMI’s research and development capabilities and its product pipeline.

“Life Healthcare will continue to participate in the future growth of LMI through the earnouts. In addition Life Healthcare will retain the rights to manufacture, commercialise and distribute LMI products in Africa,” says Wharton-Hood.

The transaction is subject to the fulfilment or waiver of conditions typical for a transaction of this nature, with expected completion during this year.

“Upon completion of this transaction, Life Healthcare will focus on consolidating its position as a leading, diversified healthcare provider in Southern Africa, backed by a robust integrated care model and further profit-sharing opportunities through the LMI earnouts,” the company says.