Integumen plc Proposed Acquisition and Trading Update

Integumen plc Proposed Acquisition and Trading Update

Integumen (LSE: SKIN) announces that it has conditionally agreed to acquire Cellulac PLC (“Cellulac”) in an all share transaction, subject to, inter alia, due diligence and the approval of both Integumen’s and Cellulac’s shareholders (the “Proposed Acquisition”).  Cellulac has developed, acquired and integrated technologies to produce biodegradable plastic components for consumer packaging, natural oils and nutritional food ingredients for use in the cosmetics, nutritional food and health care sectors.  The Proposed Acquisition will enable Integumen to enter the highly attractive bio-materials and nutritional food sector complementing its existing personal care businesses.

The enlarged group will focus on biodegradable plastic ingredients, cosmetics and human grade food supplements and will have a portfolio of existing products, with high-margins in the oral care, medical and cosmetic industries.  Existing Integumen cosmetic packaging, oral care consumer products and third party products can in time be replaced with biodegradable plastic materials. These drop-in replacements will be focused on existing and near to market products.  Demand for these products is established and an offtake agreement worth up to $36m over five years is already in place.

The Board of Integumen believes that the Proposed Acquisition has a compelling strategic and financial rational as it will:

  • enable the enlarged group to focus on biodegradable plastic ingredients, cosmetics and human grade food supplements, complementing Integumen’s existing personal care businesses driving growth through innovative products and technology;
  • diversify and create opportunities to increase revenue streams;
  • create an enlarged group that will focus on human grade food supplements and cosmetics and will have a portfolio of existing products, with high-margins in the oral-care, medical and cosmetic industries;
  • allow the enlarged group to capitalise on the shifting opinion around single use plastics amongst consumers and policy makers by fulfilling demand for products with biodegradable plastic packaging.  Existing Group cosmetic packaging, oral care consumer products and third party products can in time be replaced with biodegradable plastic materials and these replacements will be focused on existing and near to commercialised products;
  • provide significant market opportunities due to complementary business activities; and
  • bring a strong well-established management team to the enlarged group.

Integumen proposes to acquire the entire issued and to be issued share capital of Cellulac. The consideration will comprise such number of new ordinary shares in Integumen (“Consideration Shares”) as will represent approximately 84% of the issued share capital, as enlarged by the Consideration Shares only.  In addition, Integumen intends to raise up to £7.5 million by way of an equity placing and/or debt funding (the “Fundraising”).

The Proposed Acquisition would constitute a reverse takeover for Integumen under Rule 14 of the AIM Rules for Companies (the “AIM Rules”) and under the City Code on Takeovers and Mergers (“Code”).  Accordingly, under the AIM Rules the Proposed Transaction is subject to the publication of an admission document and approval by Integumen’s shareholders.

In accordance with Rule 14 of the AIM Rules, the Companys ordinary shares will be suspended from trading on AIM with effect from 7:30 a.m. today.  The Companys ordinary shares will remain suspended until such time as either an admission document is published, or an announcement is released confirming that the Proposed Acquisition is not proceeding.  The Company will update its shareholders as and when appropriate.

Cellulac is a public company with 35 shareholders and, although its shares are not traded on any exchange, it is currently also subject to the Code.  However, a non-waivable condition of the Proposed Transaction is that Cellulac will re-register as a private company, at which point it will cease to be subject to the Code.  Further details regarding the proposed re-registration of Cellulac as a private company and the operation of the Code are provided below.

The Proposed Acquisition will be subject to a number of further conditions, including, inter alia, completion of satisfactory due diligence, amendments to Cellulac’s convertible debt, the entering into and completion of a share purchase agreement, publication of an AIM admission document, the grant of a waiver by the Panel in connection with a Whitewash (as detailed further below), approval of both Integumen’s and Cellulac’s shareholders, and the Fundraising.

In conjunction with the admission of Integumens enlarged share capital to trading on AIM (Admission), the Company intends to perform a consolidation of its ordinary shares and change the name of the Company to Cellulac plc. 

Information on Cellulac

Cellulac is a vertically integrated group of companies with operations in Ireland and with headquarters in the United Kingdom.  Activities undertaken by these companies range from the production of biodegradable plastic ingredients and natural oils to expertise in consumer marketing in cosmetics, food and health care industries.  The production division capabilities include process engineering, chemical engineering, biochemistry and polymer science.

Cellulac has scaled from 10-litre Omega 3, laboratory scale in 2009 to pilot-scale of 1,000 litres in 2014.  This was further expanded up to 10,000 litres in 2015 before moving to commercial scale of 80,000 litres in 2016. 

Commercial scale batches of Omega 3 oil for human consumption, resulted in operational savings of 25% over conventional Omega 3 production methods.  Regulatory approvals were sought and received for the sale of the product in the European Union and the United States. 

Cellulac’s website address is

Proposed changes to the board of directors of Integumen 

Upon Admission, it is proposed that Gerard Brandon and Camillus Glover, who are, respectively, the current Chief Executive Officer and Chief Operations Officer of Cellulac, will join the Board as (I) Chief Executive Officer and (II) Chief Operations Officer, respectively.  It is proposed that Chris Bell, the current Chief Financial Officer of the Company, will remain as an executive director upon Admission.  It is further proposed that an additional two non-executive directors will be appointed to the Board.  In light of the above, Declan Service has resigned from the Board with immediate effect and Chris Bell has agreed to act as interim Chief Executive Officer of the Company. 

Trading Update

On 22 December 2017, the Board of Integumen outlined its commitment to review the product portfolio with a view to setting commercialisation priorities for 2018 and beyond.  After considering a number of options the Board determined that it needed to expand its revenue generating activities through product acquisitions to enhance its higher margin oral care, skincare and personal care business and leverage its cost base more effectively.

Consequently, pending completion of the Proposed Acquisition and the Fundraising, the Board has decided to continue the promotion of the more significant revenue generating technologies, in the expectation that they have the earliest potential for positive cash-flow.  To support this, the Board has approved a cost reduction and cost deferral programme amounting to a saving of approximately £40,000 a month across other areas of the business and corporate overheads.  In addition the Company is in the process of undertaking a small debt or equity raise, in association with Cellulac, to pay ongoing transaction costs and increase its financial resources while the transaction progresses.

Stoer, the male cosmetics brand, has been progressing sales from existing inventory acquired as part of its acquisition, via new online outlets.  Pending further funding, development activities beyond existing products at Visible Youth and Clarogel have been reduced, contract discussions with Champion Shave deferred and emphasis is now targeted on maintaining the Companys patent and trademark portfolio. 

Announcements made by Cellulac in connection with the Proposed Acquisition will be made on its website at

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