Bioventus to buy CartiHeal despite financing problems

CartiHeal's device Credit: CartiHeal
CartiHeal's device Credit: CartiHeal

Unable to raise the money for the acquisition due to market conditions, Bioventus will finance the $500 million deal through postponed payments to CartiHeal.

US orthologics company Bioventus will acquire Israeli cartilage treatment company CartiHeal, despite its problems in financing the deal.

Last month, Bioventus announced that it had canceled the $415 million it planned to raise to finance the acquisition, due to market conditions, and it did not have enough cash in its coffers to complete the deal, although it added that it was seeking alternative financing.

Elron Ventures (TASE: ELRN), which has a 25% stake in CartiHeal, today notified the Tel Aviv Stock Exchange that the sale would go ahead by postponing most of Bioventus's initial payment. Bioventus originally agreed to pay $350 million for the Israeli company immediately plus up to $150 million in milestone payments, after Cartiheal received FDA clearance for its product for growing unscarred cartilage tissues.

But now Bioventus will pay $100 million immediately, a further $50 million in one year and the rest gradually over the subsequent 30 months. Bioventus has increased its credit lines so it can meet the initial payment. The delayed payments will bear 8% annual interest.

In addition the threshold for the milestone payments has been cut from $100 million worth of Cartiheal products over one year to $75 million.

An additional new clause in the agreement enables CartiHeal's shareholders to claim back their stakes if Bioventus is late in its payments. In addition to Elron, CartiHeal's shareholders include Accelmed, aMoon, Peregrine Ventures, Johnson & Johnson Innovation, and Access Medical.

Published by Globes, Israel business news - - on June 20, 2022.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2022.

CartiHeal's device Credit: CartiHeal
CartiHeal's device Credit: CartiHeal
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