AN ICELANDIC orthopaedics group with more than 2,000 staff across 18 locations has confirmed it is buying Livingston-based upper limb prosthetics specialist Touch Bionics in a £27.5 million deal.

Reykjavik-based Össur, named after Icelandic prosthetics pioneer Össur Kristinsson, said the Scottish acquisition would allow it to offer a complete bionic product portfolio to customers in the prosthetic industry.

“Touch Bionics has developed cutting edge upper limb technology and created a strong brand presence over recent years,” said Jon Sigurdsson, the president and chief executive of Össur, which has specialised until now on patients who have lost a leg above or below the knee. “This acquisition is an important milestone for Össur as it marks our entry into the upper limb prosthetic market. Össur and Touch Bionics are committed to pushing the boundaries of bionic technology to enable amputees to live a life without limitations.”

Touch Bionics, which employs more than 120 people in Scotland, Germany and the US, was the first company to develop an electrically powered prosthetic hand with five independently powered fingers. Last year it launched the i-limb quantum, the first upper limb prosthesis that can change grips with a simple gesture. The company’s products also include a synthetic covering that closely resembles human skin. More than 5,000 people worldwide have been fitted with Touch’s i-limb products.

“This is a natural fit for both Touch Bionics and Össur,” said Niki McKenzie, investment director of Edinburgh-based business angel syndicate Archangels, which has been an investor in Touch Bionics since 2003, when it was the first company to be spun out of the NHS in Scotland.

“The deal represents a good deal for Scotland, for staff and for shareholders as Össur plans to retain Touch Bionics’ Livingston base and build on the unique expertise that Touch Bionics has built up since 2003.”

Össur chief financial officer Sveinn Solvason said there were no plans to change the Scottish operation, but as both businesses sold to the same customers in the same markets, the integration of the sales and marketing operation was currently being considered. Össur said synergies between the two businesses were expected to be achieved over the next two to three years, ultimately increasing the underlying earnings margin of Touch Bionics to a similar level as for Össur.

Shareholders including Archangels and Scottish Investment Bank – the investment arm of Scottish Enterprise and another long-term investor – confirmed that they were selling the business for a consideration of £27.5 million on a cash and debt free basis.

Five board members of the Archangels syndicate originally invested an initial £5,000 each to enable prosthetist and i-limb inventor, David Gow, to complete proof of concept for his revolutionary product.

A Dumfries-born mechanical engineer who started researching upper limb prostheses at the University of Edinburgh in the 1980s, Mr Gow was named Commander of the Order of the British Empire in the 2014 Queen’s Birthday Honours list.

“As founder, I had high hopes when NHS Scotland supported the original start-up company which later blossomed into Touch Bionics,” Mr Gow said. “Over a decade later, my aspirations for Touch Bionics have been more than realised and I am extremely proud and delighted that Touch Bionics’ new home will be with Össur. I am confident that this will mean that the i-limb and i-digits will be taken forward in safe hands, enabling even more wearers to benefit from this life enhancing technology.”

At its latest annual results in January, Touch Bionics posted an 11 per cent rise in revenues to £15 million and said it expected to make a pre-tax profit for the 12 months to end December 2015.

Founded in 1971, Össur is listed on the Icelandic and Copenhagen stock exchanges and has extensive operations in the Americas, Europe, and Asia. It specializes in prosthetic, bracing and supports solutions. In 2015, it reported underlying earnings of $99m on net sales of $483m.