STOCKHOLM - Hygiene and health company Essity has signed an agreement to acquire an majority stake in Swedish medical solutions company ABIGO Medical AB.

Gothenburg-based ABIGO Medical, develops, manufactures and markets products including the Sorbact technology, which is a clinically established innovation for advanced wound care.

Founded in 1989 by the brothers Jan G and Leif Smith, the company has about 170 employees and reported net sales of approximately SEK 403 million in 2019.

Following completion of the deal, Jan G. Smith will retain a 25 per cent stake in the company and remain as chairman of the board.

The company, which is currently a key partner and sub-supplier to Essity, is valued at SEK 900 million on a debt-free basis.

"The acquisition is a good strategic fit for Essity and strengthens the innovation capacity of our Medical Solutions business," said Magnus Groth, president and CEO of Essity. "ABIGO Medical has leading innovations in advanced wound care that reduce the spread of bacteria without increasing resistance to antibiotics."

Jan G. Smith said: "Essity's values and strategy are well aligned with ABIGO's ambitions for the future and with Essity as a partner, we believe there is great potential to continue our shared journey of growth."

Sorbact is a technology that Essity, through ABIGO Medical AB, already uses in its wound care products to prevent and treat infections. It does this using a natural mode of action that binds bacteria and fungi. Sorbact does not contain antiseptics or other toxic substances, which is positive for both the patient and the environment.

The completion of the transaction is subject to customary regulatory approvals and closing is expected to take place during the second quarter of 2020.