- Acquisition will be immediately profit accretive; presents opportunity to assist in providing an essential capability to Singapore in this next phase of tackling the COVID-19 pandemic, as the availability of good quality test kits and testing services will be an important cog in the national response to treating and living with COVID-19

Aoxin Q & M Dental Group Ltd (SGX: 1D4.SI) ("Aoxin Q & M") and Q & M Dental Group (Singapore) Limited (SGX: QC7.SI) ("Q & M"), announced today that Aoxin Q & M will acquire 49% of Acumen Diagnostics Pte. Ltd. ("Acumen Diagnostics") for a consideration of S$29.4 million. Acumen Diagnostics has a preliminary valuation of S$60 million.

Acquisition & Valuation

Aoxin Q & M has entered into a conditional sale and purchase deed with Acumen Diagnostics' shareholders, Dr Ong Siew Hwa and Acumen Holdings Pte. Ltd., to acquire their 49% shareholding in Acumen Diagnostics.

The preliminary valuation of Acumen Diagnostics (upon completion of a restructuring exercise involving Acumen Research Laboratories Pte. Ltd.) is S$60 million, derived based on the latest financial statements of Acumen Diagnostics, taking into account the earnings and growth prospects of its business.

The purchase consideration for the shares is S$29.4 million, to be satisfied by way of the allotment and issuance of new ordinary shares in the capital of Aoxin Q & M at an issue price of S$0.231 per share, credited as fully paid-up shares in the capital of Aoxin Q & M which will rank pari passu in all respects with the existing shares in the capital of Aoxin Q & M.

Upon completion of the acquisition, Aoxin Q & M will directly hold 49% of Acumen Diagnostics, with Q & M holding the balance of 51%. Q & M's total effective ownership of Acumen Diagnostics will thus amount to 67.15%, based on its 32.95% equity stake in Aoxin Q & M. See diagram 1 below.

Diagram 1: Shareholdings upon completion of acquisition of Acumen Diagnostics by Aoxin Q & M

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Rationale of Acquisition & Valuation

The acquisition and integration of the Acumen Diagnostics business into Aoxin Q & M is timely and strategic, allowing Aoxin Q & M to enter the medical diagnostics business in Singapore and capture a significant portion of the testing capacity market in conducting frequent and widespread testing, in support of Singapore's national COVID-19 strategy.

The proposed acquisition would also improve the profitability of Aoxin Q & M through the sharing of profits and improve the cashflow position of Aoxin Q & M as and when Acumen Diagnostics declares dividends down the line. Over time, Aoxin Q & M will benefit from potential commercial, operational and costs synergies between itself and Acumen Diagnostics. The Board of Directors of Aoxin Q & M believes that the proposed acquisition will enhance the long-term interests of Aoxin Q & M and its shareholders.

With over 80% of the population now vaccinated, Singapore is moving towards a "living with COVID-19" strategy or treating COVID-19 as an "endemic" disease. In a live address in May 2021, the Prime Minister, Lee Hsien Loong, laid out the government's three-pronged strategy of "vaccination, contact-tracing and testing" as the country starts to reopen.

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