Covalon Announces Definitive Agreement to Acquire AquaGuard and its Specialized Salesforce Capable of Selling Covalon’s
Products Throughout the United States
Covalon Technologies Ltd. (the "Company" or "Covalon") (TSXV: COV.V; OTCQX: CVALF), an advanced medical technologies company,
today announces that it has entered into a definitive agreement to acquire AquaGuard, the Seattle, Washington-based division of
medical technologies company Cenorin, LLC. AquaGuard’s specialized products provide patients with crucial moisture protection for
wound, surgical, and vascular access sites throughout the body while showering.
Brian Pedlar, Chief Executive Officer of Covalon, said, “I am very excited about this acquisition – AquaGuard’s experienced
sales team and specialized product line are a perfect synergistic fit for Covalon’s business. AquaGuard’s talented sales team has
built strong relationships with clinicians and hospital staff throughout the United States that make decisions on the very same
products Covalon makes – vascular access dressings, surgical site management products, and advanced wound care dressings.”
Gerry Arambula, President of AquaGuard, stated, “The AquaGuard sales and operations teams are very excited about joining forces
with Covalon. Our AquaGuard team has built a profitable and growing business that is well-positioned to represent and sell many of
Covalon’s infection management products, such as IV Clear, immediately into our customer base. We are looking forward to working
with the Covalon team to transform Covalon’s business in the United States. Products will be made available through AquaGuard’s
established distribution channels at key hospitals and group purchasing organizations across the United States, as well as through
third-party distribution partners, including Amazon.”
Gerry Arambula and existing AquaGuard leadership will continue to play key roles in leading the business going forward.
Following the closing of the transaction, Covalon will have in the United States a customer base of over 1,500 hospitals and
clinics. Covalon also anticipates an opportunity to sell AquaGuard’s products through Covalon’s international distribution
channels.
Under the terms of the definitive agreement, Covalon will acquire all of the assets and staff dedicated to the AquaGuard
business from Cenorin, LLC. Covalon anticipates the transaction will close in less than sixty days and is subject to customary
closing conditions and TSX Venture Exchange and lender approval. The consideration of $16.1 million (US$12,375,000) is comprised of
the following:
- $4.7 million (US$3,617,392) in cash on closing
- $0.65 million (US$500,000) of shares of Covalon issued on closing and held in escrow for up to two
years
- $3.32 million (US$2,552,300) payable 12 months from the closing date
- $6.5 million (US$5,000,000) payable 24 months from closing date
- $0.92 million (US$705,308) of assumed liabilities payable to management and key staff of AquaGuard by
issuance of shares of Covalon on closing
- In addition, there is potential contingent consideration of up to $1.17 million (US$900,000) payable
upon achievement of certain revenue targets by December 31, 2018.
During its last fiscal year ended December 31, 2017, the AquaGuard business recorded $11.1 million (US$8.5 million) in revenue
and $683,000 (US$526,000) in profit before taxes.
Covalon’s Board of Directors unanimously approved entering into the agreement. Acting as financial and legal advisors to Covalon
are Morrison Park Advisors, and Stikeman Elliott LLP, respectively.
About AquaGuard
AquaGuard is a United States-based medical technology business that specializes in infection protection products that protect
surgical incisions, intravenous (IV) sites, catheters, PICC lines, and other dressings from water and other moisture while a
patient showers. AquaGuard’s family of products provide protection for sites and dressings all over the body, and can be applied by
most patients without the need of assistance from medical professionals.
About Covalon
Covalon Technologies Ltd. researches, develops, and commercializes new healthcare technologies that help save lives around the
world. Covalon's patented technologies, products, and services address the advanced healthcare needs of medical device companies,
healthcare providers, and individual consumers. Covalon's technologies are used to prevent, detect, and manage medical conditions
in specialty areas such as infection control, vascular access, surgical procedures, advanced wound care, and medical device
coatings. To learn more about Covalon, visit our website at
www.covalon.com
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture
Exchange) accepts responsibility for the adequacy or accuracy of this release.
This news release contains forward-looking statements which reflect the Company's current expectations regarding future
events. The forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate",
"plan, "estimate", "expect", "intend" and statements that an event or result "may", "will", "should", "could" or "might" occur or
be achieved and other similar expressions. These forward-looking statements involve risk and uncertainties, including completion of
the AquaGuard acquisition, the difficulty in predicting product approvals, acceptance of and demands for new products, the impact
of the products and pricing strategies of competitors, delays in developing and launching new products, the regulatory environment,
fluctuations in operating results and other risks, any of which could cause results, performance, or achievements to differ
materially from the results discussed or implied in the forward-looking statements. Many risks are inherent in the industry; others
are more specific to the Company. Investors should consult the Company's ongoing quarterly filings for additional information on
risks and uncertainties relating to these forward-looking statements. Investors should not place undue reliance on any
forward-looking statements. The Company assumes no obligation to update or alter any forward-looking statements whether as a result
of new information, further events or otherwise.
Covalon Technologies Ltd.
Brian Pedlar, 905-568-8400 x 233
CEO, Covalon Technologies Ltd.
bpedlar@covalon.com
Toll free: 1-877-711-6055
www.covalon.com
Twitter: @covalon
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