Acquisition of the Second Territory Business of ACON Laboratories, Inc. and Related Entities

On April 30, 2009, Inverness Medical Innovations, Inc. (the "Company") completed its previously announced acquisition of the assets of ACON Laboratories, Inc.'s and certain related entities' (collectively, "ACON") business of researching, developing, manufacturing, distributing, marketing and selling lateral flow immunoassay and directly-related products (the "Business") for the remainder of the world outside of the First Territory (as defined below), including China, Asia Pacific, Latin America, South America, the Middle East, Africa, India, Pakistan, Russia and Eastern Europe (the "Second Territory Business"). In connection with the closing of the acquisition of the Second Territory Business, the Company delivered an initial payment of $80 million in cash to ACON. The Company acquired ACON's Business in the United States, Canada, Western Europe (excluding Russia, the former Soviet Republics that are not part of the European Union and Turkey), Israel, Australia, Japan and New Zealand (the "First Territory") in March 2006.

The aggregate purchase price for the Second Territory Business, including the $80 million initial payment described above, will be approximately $200 million based upon a multiple of either the Second Territory Business' revenue or its pre-tax profits for calendar year 2008, as well as working capital and other customary adjustments. Except as described above, the remaining aggregate purchase price is expected to be paid in several installments with approximately eighty-five percent (85%) of the purchase price (the "Initial Purchase Price Amount") being paid by the end of the third quarter or the beginning of the fourth quarter 2009. On July 1, 2009, the Company will pay an amount equal to 35% of the Initial Purchase Price Amount in cash or shares of the Company's common stock. On or prior to the tenth business day following a financing of at least $100 million in cash, the Company will pay the remainder of the Initial Purchase Price Amount (except for the July 1, 2009 payment), but in the event no such financing has been completed, the Company will pay any remaining Initial Purchase Price Amount on August 31, 2009, up to a maximum of $25 million, and thereafter will pay any further remaining Initial Purchase Price Amount on the last calendar day of succeeding months beginning on September 30, 2009, up to a maximum of $10 million per payment. Portions of the Initial Purchase Price Amount paid after the closing date will bear interest at a rate of four percent (4%) per annum. The remainder of the purchase price will be due in two final installments, each comprising 7.5% of the total purchase price, on the dates fifteen (15) and thirty (30) months after the closing. These amounts do not bear interest and may be paid in cash or a combination of cash (not less than approximately seventy-one percent (71%) of each payment) and shares of the Company's common stock (not more than approximately twenty-nine percent (29%) of each payment).

The actual number of shares of common stock to be issued in this transaction, if any, is determined by reference to a formula by which the value of the common stock to be issued by the Company is divided by a price per share equal to the volume weighted average price of the common stock during the ten trading days immediately preceding the date of issuance of such security. In connection with any issuance of common stock in this transaction, the Company is relying on an exemption from registration provided under Section 4(2) of the Securities Act of 1933, as amended.

The above description of the Acquisition Agreement entered into between the Company and ACON on March 16, 2009 is a brief summary of the significant provisions of the agreement. This summary is not complete and is qualified in its entirety by reference to the copy of the Acquisition Agreement attached as Exhibit 99.l to this Current Report on Form 8-K and incorporated by reference herein.

Other Agreements Entered into at Closing In connection with the Company's acquisition of the Second Territory Business, the Company and Ron Zwanziger, its Chief Executive Officer, entered into an Amended and Restated Investor Rights Agreement, effective as of April 30, 2009, with ACON Laboratories, Inc., AZURE Institute, Inc., LBI, Inc., Oakville Hong Kong Co., Ltd., ACON Biotech (Hangzhou) Co., Ltd., Karsson Overseas Ltd., Manfield Top Worldwide Ltd., Overseas Square.

For the full text filed with the U.S. Securities and Exchange Commission, click here.

Acquisition of the First Territory Business of ACON Laboratories, Inc. and Affiliates

On March 31, 2006, we and certain of our subsidiaries completed our previously announced acquisition of the assets of ACON Laboratories’ business of researching, developing, manufacturing, marketing and selling lateral flow immunoassay and directly-related products in the United States, Canada, Europe (excluding Russia, the former Soviet Republics that are not part of the European Union, Spain, Portugal and Turkey), Israel, Australia, Japan and New Zealand (the “First Territory Business”) for approximately $55.1 million cash plus 711,676 shares of our common stock. An additional $10 million dollars in cash is payable to the sellers on the anniversary of the New Facility Closing, discussed below, and $1.2 million will be paid upon consummation of delayed closings with respect to the assets of the First Territory Business relating to Spain and Portugal, where regulatory approval is required as a condition to the acquisition.

Our Acquisition Agreement (the “Agreement”) with ACON Laboratories, Inc. and certain of its affiliates also provides that we will acquire, through a subsequent acquisition, all of the capital stock of Rich Horizons International, Ltd. and its wholly-owned subsidiary ABON BioPharm (Hangzhou) Co., Ltd., which owns a newly-constructed manufacturing facility (the “New Facility”) currently undergoing validation in Hangzhou, China. The New Facility Closing is subject to validation of the New Facility, manufacture and shipment of a substantial product to a large customer and other ordinary and customary closing conditions. We currently expect the acquisition of the New Facility to occur during the second quarter of 2006 (the “New Facility Closing”).

The aggregate purchase price for the acquired business, including payments made for the First Territory Business (as described above) and amounts to be paid for the New Facility, will be between $140 million and $175 million based upon a multiple of revenue and pre-tax profits of the First Territory Business determined from final audited financial results and subject to adjustment for working capital and net indebtedness with the Company assuming up to $4 million in net indebtedness of ABON related to the New Facility. Except as described above, the remaining aggregate purchase price is expected to be paid based on completion of certain milestones related to achievement of functional manufacturing operations in certain territories. The aggregate purchase price for the First Territory Business and the New Facility shall be paid by issuing an aggregate of up to $50 million of our common stock to ACON, with the remainder of the purchase price being paid in cash.

For the full text of this 8-K, filed with the U.S. Securities and Exchange Commission, click here.

30 April 2009
Acquisition of the Second Territory Business of ACON Laboratories, Inc. and Related Entities

05 April 2006
Acquisition of the First Territory Business of ACON Laboratories, Inc. and Affiliates