LONDON (ShareCast) - (Sharecast News) - Tooru said on Friday that it had decided not to proceed with its proposed acquisition of Mylky, citing market conditions, geopolitical risk, funding considerations and regulatory exposure.
The AIM-traded health and wellness company said the proposed deal structure would have involved a significant level of new debt.

While the enlarged group was expected to have sufficient cash flow to support that debt, the board said it did not believe now was the right time to increase leverage given difficult market conditions and heightened geopolitical risk.

Tooru said the time required to arrange the debt facility was also likely to exceed the vendor's expectations, as Mylky was being presented with other opportunities.

It added that using equity as an alternative would have been too dilutive at the company's current valuation, given the relative size of the proposed acquisition.

Further due diligence also indicated that buying Mylky would have exposed the group to European legislative risk across a major part of the enlarged business, which the board considered too high given Tooru's current expertise is primarily UK-focused.

The company said it would instead continue to focus on its existing businesses, where it saw significant potential for low-risk growth in the short term, while continuing to assess more directly aligned acquisition opportunities.

"Whilst we believe that Mylky is an excellent business, current market conditions lead us to believe that now is not quite the right time to take on such a large European business that would have required a significant amount of additional gearing," said chief executive officer Scott Livingston.

At 1419 BST, shares in Tooru were up 4.63% at 0.2p.

Reporting by Josh White for Sharecast.com.

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