Acquisition of Melbrosin

RNS Number:1866Z
BioProgress PLC
28 June 2007


For Immediate Release                                               28 June 2007



This announcement is not for release, publication or distribution, directly or
indirectly, in or into the United States, Canada, South Africa, Australia, Japan
or any jurisdiction in which the same would be unlawful. This announcement is
not an offer of securities in the United States, Canada, South Africa,
Australia, Japan or any jurisdiction in which the same would be unlawful.

                BioProgress plc ('BioProgress' or the 'Company')

BioProgress acquires the OTC trading assets of the Melbrosin Group of companies
                                 ('Melbrosin')



London, UK, 28 June 2007: BioProgress (AIM: BPRG), the specialty pharma and
healthcare company, is pleased to announce that it has entered into an agreement
to acquire the Over the Counter ('OTC') intellectual property ('IP') and trading
assets of the Melmed Group, the holding company for Melbrosin, for a
consideration of up to Euro35m (#23.6m). In addition, the Company announces that it
has raised approximately #4.9m by way of a placing for cash. The Company also
announces its intention to re-brand and change the name of the Company from
BioProgress to Meldex Group plc later in the year.



Highlights:



* Doubles the turnover of the combined Company



* Creates instant potential for considerable sales growth



  o Complementary geographical infrastructures



  o Product range is capable of distribution across enlarged Company's
    sales and marketing network



* Acquisition significantly earnings enhancing during 2007 and beyond



* Provides distribution network and critical mass for the Company's
  X-Gel(TM) enabled and other products in Germany -  the EU's most important 
  market - Austria, Italy, Canada, Eastern Europe and South America

* Market leading products for natural OTC therapies in the areas of
  Slimming, Women's Health, Men's Health and Well Being



  o Slimthru brand achieved market leadership in Austria in first 4 months
    of sales, and sales of over Euro2m in the first month of launch



* The consideration of equity for Melbrosin is subject  to an
  earn-out, 18 month lock in agreement with the Company and employment contracts
  with further lock ins





Melbrosin

BioProgress is acquiring Melbrosin, comprising businesses in Austria,
Switzerland and Germany, together with own and licensed products, intellectual
property and distribution agreements covering territories including South
America, Eastern Europe and Canada. Melbrosin's focus is upon the development
and distribution of highly valued and differentiated OTC products based upon
substances of natural and plant origin. Melbrosin's range include products in
categories covering slimming maintenance, women's health, men's health and
general well being.



Melbrosin has 52 employees predominantly performing sales and marketing
functions in Germany, Italy, England and Austria with further throughput into
the emerging markets of Eastern Europe. Sales for 2006 were Euro13.6m (#9.2m).
Sales for the four months to April 2007 were Euro7.3m (#4.9m).



Melbrosin complements BioProgress's distribution and infrastructure in its key
European market, in particular, giving the enlarged Company critical mass in
Germany, the largest EU market in OTC health care sales. The Company's strategy
has been to add to its sales capability to benefit from the market demand for
both its prescription only as well as OTC product launches.



The Company has experienced higher than expected demand for its OTC products
highlighting the need to add rapidly to its geographical infrastructure. As a
consequence of working with Melbrosin on the co-promotion of Slimthru(R), it
became clear that both companies share a number of common approaches, namely
using natural non-animal derived products, operating in expanding high value,
high growth market niches and possessing unique patented IP.



The consideration for the acquisition of Melbrosin is up to a maximum of Euro35m
(#23.6m). This comprises Euro13.6m (#9.2m) as an initial payment to be satisfied by
the issue of 15,069,631 new ordinary shares of 1p each of BioProgress (these
shares are subject to a lock in agreement with the Company until December 2008).
The second and final payment comprises an earnout dependent upon 2007 revenues
and gross profits payable by a further issue of ordinary shares in April 2008
(these shares will be subject to a lock in agreement until April 2009). Upon the
expiry of the lock in agreements the equity issued will be subject to orderly
market agreements with the Company's nominated brokers, Nomura Code Securities
Limited.



Placing

The Company also announces a placing of 8,838,545 new ordinary shares of 1p each
(the 'Placing') with new and existing institutional investors (the 'New Ordinary
Shares'), representing approximately 5.3% of the current issued share capital of
the Company at 55p per New Ordinary Share, under an existing disapplication of
pre-emption rights taken under the provisions of s.95 of the Companies Act 1985.
The Placing has been underwritten by Nomura Code Securities Limited.



The proceeds of the Placing will be used to accelerate the launch programme of
both Melbrosin's as well as the Company's OTC products. Melbrosin and
BioProgress have experienced high demand for their ranges and believe it is in
shareholders' interests to increase the marketing investment as the market
segments in which both businesses operate are exhibiting high growth.



An application has been made for the 15,069,631 new ordinary shares being issued
as consideration for Melbrosin to be admitted to the AIM market of the London
Stock Exchange. It is expected that dealings in these shares will commence on
Friday 29 June 2007. An application will be made for the 8,838,545 new ordinary
shares being issued pursuant to the Placing to be admitted to the AIM market of
the London Stock Exchange. It is expected that dealings in these shares will
commence on Thursday 5 July 2007. All of the new ordinary shares being issued,
either as consideration or pursuant to the Placing, will rank pari passu with
the existing issued ordinary shares of the Company.



Change of Name

The Company is proposing to re-brand and change its name to Meldex Group plc.
The Company will send further details to shareholders in due course.





Richard Trevillion, Chief Executive Officer, BioProgress said:

"This transaction is very exciting for the Company, and dramatically enhances
the financial profile of the Group. Joining Melbrosin with the BioProgress Group
gives both companies critical mass in high value and growth niche markets. The
enhanced Company has leading brands, a valuable distribution network, a rich
pipeline and robust IP which creates both barriers to entry and superior product
performance."



Klaus Kuhne and Helmut Kerschbaumer, joint Managing Directors of Melbrosin, the
new OTC division of BioProgress said:

"Working with BioProgress over the past few months demonstrated how both
companies can significantly grow value by leveraging core skills and assets
together. We have complementary geographical strengths and business philosophy
and strategy which should enable accelerated and profitable growth."





For further information:


BioProgress Plc                                            + 44 (0) 20 7098 9881
Richard Trevillion, CEO
Steve Martin, CDO
Hiral Patel, CFO

Buchanan Communications                                    + 44 (0) 20 7466 5000
Rebecca Skye Dietrich
Mark Court

Nomura Code Securities Limited                             + 44 (0) 20 7776 1200
Richard Potts
Aasim Qureshi









About BioProgress

BioProgress plc is an innovative specialty pharmaceutical and healthcare
business based around its platform technologies in polymer and film systems.
Listed on London's AIM in May 2003, the company has over 80 patents granted or
in application within 24 patent families and has product development agreements
and strategic alliances with several global companies. As a virtually integrated
business, BioProgress has acquired sales and marketing resources within Europe
and the US as a launch mechanism for its own pharmaceutical products. The
business continues to develop innovative delivery mechanisms using its XGEL(TM)
polymer technology, replacing the need to use animal-derived gelatine in
pharmaceutical and healthcare products. For further information please go to
www.bioprogress.com



About Melbrosin

Melbrosin is a private Austrian-Swiss company founded in 1959 and bought out by
its present owner managers in 2000. The Company's focus is upon consumer health
care products based on substances of natural and plant origin. Natural actives
are developed into consumer orientated brands then scaled, produced and
distributed by Melbrosin. Melbrosin achieved turnover of Euro14 Million in 2006.
For further information please go to www.melbrosin.at



About Slimthru

Slimthru, marketed as 'SlimCup' elsewhere in Europe, has been launched
successfully by Melbrosin in the German, Austrian and Italian markets. The
product uses natural ingredients and is positioned as a weight maintenance
product, avoiding the problems associated with rapid weight loss and subsequent
gain (the 'yoyo' effect) associated with traditional appetite suppressant and
weight loss products. Slimthru is therefore complementary with both existing
market prescription and other OTC slimming products. For further information
please go to www.slimthru.co.uk



This announcement is for information only and does not constitute an offer or
invitation to underwrite, subscribe for or otherwise acquire or dispose of any
securities or investment advice in any jurisdiction. Past performance is no
guide to future performance. Persons needing advice should consult an
independent financial adviser. This announcement does not constitute an offer to
sell or issue, or the solicitation of an offer to buy or subscribe for,
securities in the United States, Canada, South Africa, Australia or Japan or any
jurisdiction in which such offer or solicitation is unlawful and should not be
relied upon in connection with any decision to acquire Ordinary Shares or other
securities in the capital of BioProgress. There will be no public offer of
Ordinary Shares in the United States, the United Kingdom or elsewhere.

This announcement is only addressed to and directed at persons in member states
of the European Economic Area ("EEA") who are "qualified investors" ("Qualified
Investors") within the meaning of Article 2(1)(e) of the EU Prospectus Directive
(Directive 2003/71/EC) (the "Prospectus Directive"). Any person in the EEA who
acquires any Ordinary Shares in the Placing or to whom any offer of securities
is made will be deemed to have acknowledged and agreed that they are such a
Qualified Investor. This announcement is for information purposes only and does
not constitute an offer to sell or issue, or the solicitation of an offer to buy
or subscribe for, securities in the United States or in any other jurisdiction.

The New Ordinary Shares have not been and will not be registered under the US
Securities Act of 1933, as amended (the "Securities Act") and may not be offered
or sold in the United States unless registered under the Securities Act or an
exemption from such registration is available.  There will be no public offering
of Ordinary Shares in the United States, the United Kingdom or elsewhere.

Neither this announcement nor any copy of it may be taken, transmitted or
distributed, directly or indirectly in or into the United States, Canada,
Australia or Japan. Any failure to comply with this restriction may constitute a
violation of United States, Canadian, Australian or Japanese securities laws.The
distribution of this announcement and the offering or sale of Ordinary Shares in
certain jurisdictions may be restricted by law. No action has been taken by
Nomura Code, or any of its affiliates, that would permit an offer of the New
Ordinary Shares or possession or distribution of this announcement or any other
offering or publicity material relating to the New Ordinary Shares in any
jurisdiction where action for that purpose is required. Persons into whose
possession this announcement comes are required by Nomura Code to inform
themselves about and to observe any such restrictions.

This announcement has been issued by and is the sole responsibility of
BioProgress. Nomura Code and its respective affiliates and agents shall have no
liability for any information contained in it relating to BioProgress. Nomura
Code, which is authorised and regulated in the United Kingdom by the Financial
Services Authority, is acting exclusively for BioProgress and no-one else in
connection with the Placing and Admission and will not be responsible to any
other person as its client or be responsible to any other person for providing
the protections afforded to clients of Nomura Code or for providing advice in
relation to the Placing or in relation to the contents of this announcement or
for any other transaction, arrangement or matters referred to in this
announcement.

Members of the public are not eligible to take part in the Placing. This
announcement is for information purposes only and is directed only at persons
whose ordinary activities involve them in acquiring, holding, managing and
disposing of investments (as principal or agent) for the purposes of their
business and who have professional experience in matters relating to investments
and are persons who: (a) fall within article 19(5) of the Financial Services and
Markets Act 2000 (Financial Promotion) Order 2005, as amended ("the Order") or
are persons falling within article 49(2)(a) to (d) ("high net worth companies,
unincorporated associations, etc") of the order; and (b) are qualified investors
within the meaning of section 86(7) of the Financial Services and Markets Act
2000, as amended ("FSMA"); and (c) have been invited to participate in the
placing by Nomura Code (all such persons together being referred to as "relevant
persons").




Forward-Looking Information.

The Ordinary Shares of BioProgress plc are registered under the US Securities
and Exchange Act of 1934.  To the extent that this announcement contains certain
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, this paragraph applies.  These statements are
based on management's current expectations and are subject to uncertainty and
changes in circumstances.  Actual results may vary materially from the
expectations contained in the forward-looking statements.  The forward-looking
statements in this release include statements addressing future financial and
operating results and the timing and benefits of the reorganisation.  Detailed
information about factors pertinent to the business of the company that could
cause actual results to differ is set forth in the Company's filings with the
Securities and Exchange Commission.  The Company is under no obligation to (and
expressly disclaim any such obligation to) update or alter its forward-looking
statements whether as a result of new information, future events or otherwise.
This announcement is for information only and does not constitute an offer or
invitation to acquire or dispose of any securities or investment advice.  The
distribution of the announcement and/or issue of securities in certain
jurisdictions may be restricted by law.  Persons into whose possession this
announcement comes are required to inform themselves about and to observe such
restrictions.






                      This information is provided by RNS
            The company news service from the London Stock Exchange
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