Comvita has sold its Medihoney brand and related intellectual property and goodwill to its long term US partner Derma Sciences in a deal that will realise a minimum of NZ$30 million.

Gross proceeds amount to US$13.25m (about NZ$19m) with a further US$5m payable in the form of an earnout upon future annual sales milestones being achieved.

The tranaction also strengthens Comvita's position as a long term medical honey supplier to Derma Sciences, as well as using Derma Sciences' medical device manufacturing and product development capability to more rapidly grow Medihoney consumer sales by Comvita.

Derma Sciences currently holds the exclusive global licence for the Comvita owned Medihoney brand and patents for the medical and professional segments.

The US company also currently pays royalties to Comvita for use of the brand and trademarks. These royalties which were worth $2.1 million for Comvita in the 2016 calander year, will cease as a result of the transaction.

Comvita keeps exclusive use of the Medihoney brand to develop its over the counter business which includes any retail outlet or website where customers can buy products without the need for a prescription or an order from a clinician or physician.

'We have an exciting range of OTC woundcare and therapeutic skincare products in particular supporting customers who are prones to eczema, where we can leverage Derma Sciences' success in the use of the Medihoney brand in the professional medical market,” says Comvita CEO Scott Coulter.

'As part of this transaction we are pleased to announce the launch of our first Medihoney adhesive bandage range which will be available in 2017.

'Derma Sciences will hold all the regulatory approvals to make to Europe and US medical device standards, and having a partner who can manufacture to these standards is invaluable as we plan to take the OTC Medihoney business to the next level globally.”

Under Derma's leadership the Medihoney brand has grown to be the largest line of medical grade honey products for advanced wound care use in the world, totalling global sales of about $20m in 2016, says Derma Sciences CEO Stephen T. Wills.

'What is importat to Derma Sciances and to the healthcre professionals and patients who benefit from these important product is security of supply,” says Stephen.

'Under the terms of the deal we have a new ten year medical supply agreement with comvita which gives Derma Sciences surety with respect to its needs.

'Comvita has supplied us for more than a decade and having the backing of Comvita its supply chain and related partnerships gives us the confidence to continue to invest in the growth of our Medihoney business.”

Settlement of the transaction will be paid this month, with the proceeds to be applied to debt reduction and then for funding strategic initiatives and potential acquisitions currently under consideration by Comvita.

On January 10 Derma Sciences announced it is to be acquired by Integra LifeSciences for US$7 a share.

Comvita owns 1,098,213 shares in Derma Sciences, with a book value at June 30, 2016, of NZ$4.95 million. Integra LifeSciences purchase of Derma Sciences is expected to be completed by March 31, 2017.