Audiotech Healthcare Corp. has entered into a letter of intent to acquire a 25-per-cent equity interest in Lobe Purchasing Group Inc. (Lobe Regroupement d'Achats Inc.), the largest hearing product provider in Eastern Canada. Lobe currently manages a total of 15 clinics in Eastern Canada.
The letter of intent specifies that Audiotech will issue a total of 900,000 common shares with a deemed value of 22 cents per share to acquire the 25-per-cent equity stake in Lobe. Audiotech will also pay a finder's fee in conjunction with the transaction. The finder's fee will be satisfied through the issuance of 100,000 common shares with a deemed value of 22 cents per share.
Management believes that the union of Audiotech and Lobe under this agreement brings several advantages to both companies. Most notably, it creates the platform to commence the joint creation of a truly national network of hearing care clinics. Whereas Audiotech's existing geographical focus is Western Canada, Lobe's existing clinic network and managerial experience lie in Eastern Canadian markets, including Ontario and Quebec. The two companies will be combining their purchasing interest, thereby immediately creating one of Canada's largest groups of affiliated hearing care clinics.
"This investment will not only make Audiotech and Lobe one of the largest hearing care concerns in Canada, but this transaction is expected to be immediately accretive to Audiotech's earnings per share," stated Audiotech's president and chief executive officer, Osvaldo (Ozzie) Iadarola. "This transaction is the first step in Audiotech's plans to becoming the first nationwide hearing care provider in Canada."
It is expected that the definitive purchase agreement will include provisions whereby Audiotech will have the opportunity or right to acquire an additional equity interest in Lobe in the future.
The acquisition is subject to a number of conditions, including the satisfactory outcome of a financial and operational due diligence process to be completed by Audiotech and the receipt of all necessary regulatory approvals. Subject to the negotiation of a definitive agreement, it is anticipated that the acquisition will be completed on or before Feb. 28, 2005.