Zila, Inc. Announces Strategic Divestiture of Zila Nutraceuticals, Inc.
August 14 2006 - 8:30AM
Business Wire
Zila, Inc. (Nasdaq GM: ZILA) announced that it has signed a
definitive agreement for the sale of all of the common stock of its
Zila Nutraceuticals, Inc. subsidiary to NBTY, Inc. (NYSE:NTY). The
purchase price is up to $40.5 million with $37.5 million to be paid
in cash at close and the remainder to be paid through an earn-out
formula that is dependent upon the future performance of the
business. The closing of the sale is contingent upon the approval
of the transaction by Zila, Inc. shareholders and the successful
completion of other normal and customary pre-closing conditions.
Zila Nutraceuticals is the manufacturer and marketer of Ester-C(R)
and Ester-E(R), branded, highly effective forms of Advanced
Protection vitamins C and E. The sale is consistent with Zila's
strategy of focusing its business on cancer detection technologies
and divesting non-core assets. "We are pleased to announce that we
have reached an agreement for the divestiture of Zila
Nutraceuticals at a price that is consistent with the valuations of
transactions in the Nutraceutical sector," said Douglas Burkett,
Ph.D., Chairman, Chief Executive Officer and President of Zila,
Inc. "This divestiture will enable the transformation of Zila into
a high growth cancer diagnostic company. We intend to align Zila's
revenue and infrastructure with our oral cancer detection business
in order to further accelerate the growth of ViziLite(R) Plus as we
work in parallel towards the launch of OraTest(R). We thank the
valued employees of Zila Nutraceuticals for their many years of
contribution to the collective efforts of Zila, Inc. and we wish
them the best as they become an important part of the operations of
NBTY." The transaction is expected to close by October 2006 and the
final cash received at close will be adjusted as the result of a
working capital formula that is incorporated into the transaction.
The transaction also requires that Zila retire the approximately
$2.7 million of debt that is associated with the Zila
Nutraceuticals manufacturing facility. Zila currently has
approximately $3.6 million in restricted cash securing the debt
that will be utilized to retire the debt with the remaining balance
to be released to the Company. About Zila Zila, Inc., headquartered
in Phoenix, is an innovator in preventive healthcare technologies
and products, focusing on enhanced body defense and the detection
of pre-disease states. Zila has three business units: -- Zila
Biotechnology, a research, development and licensing business
specializing in pre-cancer/cancer detection through its patented
Zila Tolonium Chloride and OraTest(R) technologies. -- Zila
Pharmaceuticals, a manufacturer and marketer of products to promote
oral health and prevent oral disease, including ViziLite(R) Plus
oral examination kits and Peridex(R) prescription periodontal
rinse. -- Zila Nutraceuticals, manufacturer and marketer of
Ester-C(R) and Ester-E(R), branded, highly effective forms of
Advanced Protection vitamins C and E. For more information about
Zila, visit www.zila.com. This press release contains
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. The words, "believe," "expect," "anticipate,"
"estimate," "will" and other similar statements of expectation
identify forward-looking statements. Forward looking statements
contained herein include, but are not limited to, statements
regarding the OraTest regulatory effort, the potential of our
pharmaceutical and biotechnology products, the potential
divestiture of Zila Nutraceuticals, the future EBITDA performance
of Zila Nutraceuticals and the credit facility. These
forward-looking statements speak only as of the date the statements
were made and are based upon management's current expectations and
beliefs and are subject to a number of risks and uncertainties,
some of which cannot be predicted or quantified. Furthermore, these
forward-looking statements are based largely on Zila's expectations
or forecasts of future events, can be affected by inaccurate
assumptions and are subject to various business risks and known and
unknown uncertainties, a number of which are beyond the Company's
control. Therefore, actual results could differ materially from the
forward-looking statements contained herein. A wide variety of
factors could cause or contribute to such differences and could
adversely impact revenues, margins, profitability, cash flows and
capital needs, the ability of the Company to maintain required cash
flows and cash availability to implement its business plan and
appreciation in the market value of Zila's common stock. Such
factors include, but are not limited to: increased competition from
current competitors and new market entrants; the Company's ability
to maintain, expand, or in certain cases, regain distribution
within new or existing channels of trade for its products; and the
market acceptance of the ViziLite(R) Plus and Ester-E(R) products
and the future gross margins for such products. A wide variety of
factors will impact the length, size and expense of the OraTest(R)
clinical program; the FDA's ultimate decision regarding the
OraTest(R) clinical program and product; the limitations on the
indicated uses for the OraTest(R) product; and the ultimate market
reception of the OraTest(R) product. There can be no assurance that
the forward-looking statements contained in this press release
will, in fact, transpire or prove to be accurate. For a more
detailed description of these and other cautionary factors that may
affect Zila's future results, please refer to Zila's Report on Form
10-Q for its fiscal quarter ended April 30, 2006, filed with the
Securities and Exchange Commission.
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